Which Incoterm is most common in U.S. imports?

FOB (Free On Board) is the most common for ocean freight. It aligns with U.S. customs valuation rules, which use the transaction value (typically FOB) as the duty basis.

Do Incoterms affect the duty rate?

Not directly. Incoterms affect the customs value (the base for ad valorem duty calculation), not the duty rate itself. However, DDP terms mean the seller pays duties, which affects who is entitled to refunds.

Trade Terms

What is Incoterms?

International Commercial Terms published by the ICC that define the responsibilities of buyers and sellers in global trade transactions. In the context of U.S. customs and tariff recovery, understanding incoterms is essential for navigating the CAPE refund process and ensuring accurate duty assessment.

Definition

Incoterms (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international transactions. The current version, Incoterms 2020, includes 11 rules covering: who arranges transport, who pays freight and insurance, where risk transfers from seller to buyer, and who handles export/import clearance. The most commonly used Incoterms in U.S. trade are FOB (Free On Board), CIF (Cost, Insurance, Freight), EXW (Ex Works), and DDP (Delivered Duty Paid).

How Incoterms Relates to Tariff Refunds

The Incoterm in a sales contract affects the customs value calculation, which in turn affects the duty amount and potential refund. Under FOB terms, the customs value is the price at the port of origin. Under DDP, the seller has already paid duties, which affects who claims the CAPE refund. Understanding the Incoterm is essential for accurate refund calculations.

Example

A contract on DDP (Delivered Duty Paid) terms means the Chinese seller pays all duties, including Section 301 tariffs. When the tariff rate drops, the seller (not the U.S. buyer) would be the party to claim the refund — unless the contract specifies otherwise.

Frequently Asked Questions

Which Incoterm is most common in U.S. imports?: FOB (Free On Board) is the most common for ocean freight. It aligns with U.S. customs valuation rules, which use the transaction value (typically FOB) as the duty basis.
Do Incoterms affect the duty rate?: Not directly. Incoterms affect the customs value (the base for ad valorem duty calculation), not the duty rate itself. However, DDP terms mean the seller pays duties, which affects who is entitled to refunds.

Legal References

ICC Incoterms 2020

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