Does FOB always mean the port of origin?

In Incoterms 2020, FOB specifically refers to delivery onto the vessel at the named port of shipment. It is used exclusively for ocean or inland waterway transport.

Why does the U.S. use FOB instead of CIF for customs value?

U.S. law (19 U.S.C. section 1401a) defines customs value as the transaction value — the price paid or payable for the goods — which typically corresponds to the FOB price, excluding freight and insurance to the U.S.

Trade Terms

What is FOB?

Free On Board — an Incoterm where the seller's responsibility ends when goods are loaded onto the vessel at the origin port. In the context of U.S. customs and tariff recovery, understanding fob is essential for navigating the CAPE refund process and ensuring accurate duty assessment.

Definition

Free On Board (FOB) is one of the most widely used Incoterms in international trade. Under FOB, the seller delivers goods onto the vessel at the named port of origin, and the risk of loss or damage transfers from seller to buyer at that point. The buyer is responsible for ocean freight, insurance, and all costs from that point forward. In U.S. customs, FOB value is typically used as the basis for customs valuation (transaction value) — unlike some countries that use the CIF value. The FOB point is also important for determining which party is responsible for arranging export clearance.

How FOB Relates to Tariff Refunds

The FOB value is the primary basis for calculating U.S. customs duties and, by extension, the refund amount in CAPE claims. When Tariffi calculates the overpayment on each entry, it uses the transaction value (usually the FOB price) as the dutiable base.

Example

An importer buys goods FOB Shanghai at $100,000. Ocean freight to Los Angeles adds $8,000 and insurance adds $500. CBP assesses duty on the $100,000 FOB value, not the $108,500 landed cost. A 25% Section 301 tariff means $25,000 in duty — the amount subject to potential CAPE refund.

Frequently Asked Questions

Does FOB always mean the port of origin?: In Incoterms 2020, FOB specifically refers to delivery onto the vessel at the named port of shipment. It is used exclusively for ocean or inland waterway transport.
Why does the U.S. use FOB instead of CIF for customs value?: U.S. law (19 U.S.C. section 1401a) defines customs value as the transaction value — the price paid or payable for the goods — which typically corresponds to the FOB price, excluding freight and insurance to the U.S.

Legal References

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

Ready to recover your tariff overpayments?

Upload your ES-003 and see how much you could recover — no advance fees, no commitment.

Start your claim

Questions? support@tariffi.io