Incoterms 2020 · Any mode
DDP (Delivered Duty Paid): who pays what
The short answer
Who pays what under DDP
| Step | Under DDP |
|---|---|
| Export clearance | Seller |
| Main freight | Seller |
| Cargo insurance | Seller (not required, but the seller carries the risk) |
| US customs clearance | Seller |
| US import duty and fees | Seller |
| Unloading at destination | Buyer |
| Risk passes to the buyer | At the named destination, on the arriving vehicle, ready for unloading |
In the contract, DDP is followed by the place of destination where the goods are delivered, cleared and duty paid: for example "DDP Los Angeles warehouse, Incoterms 2020".
What DDP means for a US importer
DDP puts the most on the seller of any rule. A foreign seller selling DDP into the United States needs a US customs bond and a customs broker, and files the entry as a non-resident importer of record.
Tariff changes become the seller's cost under DDP. When duties rise (for example a new Section 301 or Section 232 action), a DDP seller either absorbs the increase or reprices, so read the contract's price adjustment terms.
Whoever is the importer of record is liable to US Customs for the classification, the value and the duty. If a "DDP" deal names you as importer of record on the entry, the liability is yours, whatever the contract says.
US customs value under DDP
The DDP price includes freight, insurance and the duty itself. The US customs value is still the price of the goods without the international freight, insurance and US duty (19 U.S.C. 1401a(b)(3) and (b)(4)(A)), so the seller's entry declares that value, not the DDP total.
Check the duty for your product in the Gateway tariff calculator.
Watch out for
- Ask who the importer of record will be on the entry, and get a copy of the entry summary (CBP Form 7501). That is how you check the classification and value used.
- A seller who undervalues goods to save duty under DDP can still create trouble for the buyer if CBP traces the goods to you.
DDP questions
Who pays US import duty under DDP?
The seller. Under DDP the seller clears the goods for import into the United States and pays the duties and fees.
Can a foreign company be the importer of record in the US?
Yes. A non-resident importer can be the importer of record with a US customs bond and a licensed customs broker filing the entry.
Is DDP better for a US importer?
It is simpler, but you give up control of the classification, the declared value and the freight. If the seller gets the entry wrong, the goods can still be held. DAP keeps delivery with the seller while you control customs.
Sources
- International Chamber of Commerce: Incoterms 2020
- International Trade Administration (trade.gov): Know Your Incoterms
- 19 U.S.C. 1401a(b)(4)(A): price actually paid or payable
Incoterms® is a registered trademark of the International Chamber of Commerce. This page explains the rule in our own words; the ICC publication is the authoritative text.