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Trade Terms

What is CIF?

Cost, Insurance, and Freight — an Incoterm where the seller covers all costs to the destination port. In the context of U.S. customs and tariff recovery, understanding cif is essential for navigating the CAPE refund process and ensuring accurate duty assessment.

Definition

CIF (Cost, Insurance, and Freight) is an Incoterm under which the seller is responsible for the cost of goods, marine insurance, and freight charges to deliver goods to the named port of destination. The risk of loss transfers from seller to buyer when the goods pass over the ship's rail at the port of shipment (similar to FOB), but the seller pays transport costs to the destination. CIF is commonly used in ocean freight and is one of the most recognized Incoterms in international trade. For U.S. customs purposes, the CIF value may differ from the customs value — CBP uses the FOB (transaction value) rather than the CIF value as the basis for duty calculation.

How CIF Relates to Tariff Refunds

Since U.S. customs duties are based on FOB value (not CIF), the insurance and freight components under a CIF sale do not inflate the dutiable value. When calculating IEEPA or Section 301 refund amounts, Tariffi uses the transaction value (the price actually paid or payable) as the dutiable base, consistent with CBP's valuation rules.

Example

A seller in Shanghai quotes CIF Los Angeles at $100,000. Of that, $85,000 is the goods cost (FOB), $5,000 is insurance, and $10,000 is ocean freight. CBP assesses duty on the $85,000 FOB value, not the full $100,000 CIF amount.

Frequently Asked Questions

Does the U.S. assess duties on the CIF value?
No. U.S. customs duties are based on FOB (transaction value), not CIF. Some other countries do use CIF as the dutiable base.
What is the difference between CIF and CFR?
CIF includes marine insurance; CFR (Cost and Freight) does not. Under CFR, the buyer must arrange their own cargo insurance.

Related Terms

FOBFree On Board — an Incoterm where the seller's responsibility ends when goods are loaded onto the vessel at the origin port.IncotermsInternational Commercial Terms published by the ICC that define the responsibilities of buyers and sellers in global trade transactions.Customs ValueThe declared value of imported goods used as the basis for calculating ad valorem duties, per 19 U.S.C. section 1401a.ValuationThe process of determining the customs value of imported goods for duty assessment, governed by 19 U.S.C. section 1401a.Ad Valorem DutyA tariff calculated as a percentage of the imported goods' declared customs value.

Legal References

  • ICC Incoterms 2020 — CIF
  • 19 U.S.C. § 1401a — Transaction Value

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