How to Manage Transfer Pricing and Customs Valuation Conflicts

As Swiss tariffs to the US rise, multinationals face a critical compliance challenge: adjusting transfer prices to mitigate tariff exposure creates dual regulatory exposure. Companies must simultaneously satisfy customs valuation law and transfer pricing legislation - two distinct frameworks with competing incentives.

Switzerland shipped USD 106 billion in goods to the United States last year - a trade relationship now caught in the crossfire of one of the most consequential tariff shifts in a generation. Talks between Bern and Washington are ongoing, and the legal basis continues to evolve, but the picture as it stands is this: from 24 July 2026, a customs duty of 12.5% generally applies to imports of goods with Swiss origin in the US. That is a slight improvement on the rates in force since late 2025, yet far above the rates before 2025.

Yet, there is a quieter risk just beneath the surface: the transfer pricing exposure that arises when multinational groups attempt to mitigate new tariffs without fully working through what those adjustments mean for their transfer pricing positions.

Two Systems, One Price

For large multinationals, mitigating tariff exposure almost invariably means adjusting the price at which goods are sold to a related party, typically a group distribution entity in the import jurisdiction. The moment that price changes, the adjustment ceases to be a purely commercial or customs matter and becomes, by definition, a transfer pricing issue.

Any revised pricing approach must satisfy two regulatory frameworks simultaneously: customs valuation law and transfer pricing legislation. Achieving compliance with both is harder than it may first appear. Deloitte's own research underscores this: according to The Link Between Transfer Pricing and Customs Valuation - Eighth Edition Country Guide, 66% of the surveyed jurisdictions identified related-party customs valuation as a high-focus enforcement area.

Structural Conflict of Interest

Three factors explain why dual compliance is so challenging.

First, the two disciplines rest on distinct legal frameworks. Customs valuation is governed by the WTO Agreement on Implementation of Article VII of GATT 1994, which sets out a hierarchy of valuation methods binding all WTO Members. Transfer pricing is governed by the OECD Transfer Pricing Guidelines and their arm's length principle. On the surface, the methods look alike - the transaction value method echoes the CUP method; the deductive value method resembles the resale price method; the computed value method parallels the cost-plus method - but the legal bases, data requirements, and permissible adjustments diverge significantly. Despite decades of discussion, it is now widely accepted that merging the two methodologies is unrealistic given their different legal foundations. The WTO's 2018 Guide to Customs Valuation and Transfer Pricing was a valuable attempt to help customs authorities interpret transfer pricing documentation, but in practice many authorities have made limited use of it: requirements and practices still vary widely. Tellingly, 92% of all jurisdictions surveyed by Deloitte said a transfer pricing study alone is not enough to support a related-party customs value.

Second, tax and customs authorities have competing incentives. Tax authorities prefer lower import prices, which leave more taxable profit in the import country. Customs authorities want the opposite: higher prices mean more duty collected. When the WTO put the average US import duty rate at just 3.4% in 2024, this tension was easy to live with. Now that rates run much higher, it becomes a real financial and compliance risk.

Third, in many organisations, transfer pricing and customs teams operate in isolation, rarely sharing data or coordinating on risk - which means pricing or supply-chain decisions made by one team can inadvertently create exposure for the other function.

Approaches to Dual Compliance

Each approach below offers a different degree of price reduction - but everyone, even the most modest, must be underpinned by proper transfer pricing analysis.

• Optimising within the arm’s length range: The smallest adjustment is to select a different point within the existing range - for example, a lower-quartile price under a CUP method or the upper quartile of the distributor’s margin under a TNMM. No structural change is needed, but sustaining the chosen price point operationally is harder than it appears: market conditions and comparables shift, making it easy to drift outside the supportable range and attract scrutiny from both customs and tax authorities.
• Changing the distributor model: A larger reduction can be achieved by shifting from a limited-risk to a fully-fledged distributor that takes on inventory management, credit risk and local marketing. This changes the entity’s functional profile and justifies a different transfer price. However, the shift must be genuine and properly documented from a transfer pricing perspective - a purely contractual relabelling will not withstand scrutiny.
• Local packaging, assembly or manufacturing: Incorporating a US-based packaging, assembly or manufacturing step shifts the point at which duties attach and can reduce the dutiable base to lower-value components. The customs savings can be material, but the transfer pricing model must be updated to reflect the restructured value chain; any mismatch between the customs value and the arm’s length price will draw attention from both authorities.
• Unbundling dutiable from non-dutiable charges: Separating non-dutiable elements - such as services for example from the goods price can reduce the dutiable base directly, but this is where transfer pricing and customs tension is most visible. Each carved-out charge must be genuinely non-dutiable under customs principles and independently supportable as arm’s length - otherwise the customs authority may add it back and the transfer pricing position is also exposed.

The approaches outlined above are illustrative rather than exhaustive. For a fuller discussion, including US-specific mechanisms such as First Sale for Export, see Deloitte's article on the interaction of customs value and transfer pricing.

Deloitte’s View

In the past, many companies managed transfer pricing and customs separately. When tariffs were low, the cost of any mismatch was small. In a high-tariff environment, that old approach is no longer enough. Bringing the two disciplines closer together becomes essential: regular contact between teams, joint brainstorming ahead of major decisions, periodic knowledge-sharing sessions, and a joint working group for significant restructurings so that structural changes are stress-tested against both regimes before implementation.