Incoterms DDP vs DAP vs DDU: Who Pays US Duty?

Which term puts US customs clearance and duty on you, and what does a seller need before taking on US duty?

Korean brands and US buyers sourcing from Korea often ask us the same questions:

"The retailer wants a DDP quote. Does that mean we pay the US duty?"

"Our old contract says DDU. Can we keep using it?"

"We are a Korean company. Can we clear goods into the US ourselves?"

The short answer: under DDP the seller handles US import clearance and pays the duty; under DAP the buyer does. DDU is not part of Incoterms 2020.

The longer answer is about who stands in front of US Customs and Border Protection (CBP). Picking the seller-pays term means the seller takes on the importer's job. This post walks through the three terms, then what a foreign seller needs before promising DDP.

1. Incoterms 2020 has 11 rules, and DDU is not one of them

Incoterms are trade rules published by the International Chamber of Commerce (ICC). They split delivery, cost and risk between seller and buyer. A contract names the rule and a place, for example "DAP Fullerton, California".

According to the International Trade Administration's Know Your Incoterms page, Incoterms 2020 contains 11 rules:

7 rules for any mode of transport, including DAP, DPU and DDP
4 rules for sea and inland waterway transport only

The ICC notes one rename in the 2020 edition: the former DAT (Delivered at Terminal) became DPU (Delivered at Place Unloaded).

DDU (Delivered Duty Unpaid) does not appear anywhere in the ITA list of 11 rules. It still shows up in old contracts, carrier forms and supplier price sheets, so it is worth knowing what to replace it with (section 4).

The three letters in your contract decide who owes US duty, so they need to be current Incoterms 2020 letters.

2. Incoterms DDP: the seller clears US customs and pays the duty

DDP stands for Delivered Duty Paid. ICC wording, quoted in a LexisNexis practice note, says the seller delivers when the goods are placed at the buyer's disposal, cleared for import, on the arriving means of transport, ready for unloading, at the named place of destination.

An ICC Academy article (the author's view, not ICC policy) puts the key difference between DAP and this term in one place: import customs clearance. Under DDP, the seller carries out and pays for import clearance.

On the US side, the party CBP holds responsible is the importer of record (IOR). The IOR files the entry and owes the duty. CBP's Tips for New Importers and Exporters is direct about it: even when using a broker, the importer of record is "ultimately responsible for the correctness of the entry documentation presented to CBP and all applicable duties, taxes and fees."

So this quote is more than a freight price. It is a promise to act as, or arrange, the US importer, with the duty liability that comes with that role.

A delivered-duty-paid quote is not a shipping quote. It is a commitment to take on the US importer's job.

3. DAP Incoterms: the buyer clears customs and pays the duty

DAP stands for Delivered at Place. Under DAP, the ICC Academy article says the seller delivers and transfers risk once the goods are at the agreed place of destination, ready for unloading. The buyer carries out and pays for import clearance.

The same article explains when DAP is the better fit:

Foreign sellers may have difficulty carrying out import clearance in the destination country, as the seller-pays term requires.
Some customs authorities require the local importer, here the buyer, to clear the goods. In those cases DDP cannot be used, and DAP is the appropriate rule.

For a US buyer, DAP means you are the importer. You file the entry, directly or through a licensed customs broker, post the bond and pay the duty. For a Korean seller, DAP keeps you out of US customs, but not out of the pricing conversation. The buyer will add duty to your price before setting a retail or wholesale price, and channel margins sit on top of that. Our post on US pricing by channel shows how those layers stack.

DAP moves customs work to the buyer, but the duty still ends up in the landed cost the buyer compares.

4. DDU vs DDP, and what to use instead of DDU

Because DDU is not in the Incoterms 2020 list, a contract that says "DDU" points to a rule the current edition does not define. Industry sources such as Franzosini describe DAP as the rule that took DDU's place.

The practical fix is simple. When you see DDU on an old contract or a supplier sheet, rewrite it as a current rule:

If the buyer clears customs and pays duty, use DAP plus the named place.
If the seller clears customs and pays duty, use DDP plus the named place.
Add "Incoterms 2020" after the rule so both sides read the same edition.

In practice, replacing DDU means choosing DAP or DDP: the only question is which side clears US customs.

5. The three terms side by side

Point	DDP	DAP	DDU
In Incoterms 2020	Yes	Yes	No
US import clearance	Seller	Buyer	Not a current rule
US duty	Seller	Buyer	Name means "duty unpaid"
Risk passes	Cleared for import, ready for unloading at the named place	Ready for unloading at the named place	Not a current rule
Source	ICC Academy, LexisNexis	ICC Academy	ITA

The table shows that the two current terms share the same delivery point. The one row that differs is US import clearance, and the duty follows it.

6. Can a Korean seller be the US importer of record?

Yes, with conditions. CBP Directive 3530-002A defines the importer of record as the owner or purchaser of the goods, or a licensed customs broker when the owner, purchaser or consignee designates one.

A foreign company is a nonresident corporation in CBP terms. Under 19 CFR 141.18, it can make entry when it:

Has a resident agent in the state where the port of entry is located, authorized to accept service of process.
Files a bond on CBP Form 301 with a resident corporate surety.

If the company has no IRS number, CBP's new importer page says it may request a CBP-assigned number by completing CBP Form 5106.

The bond is its own topic, covered in our post on the customs bond rule. For ocean freight, also read our ISF filing guide.

Before you agree to pay US duty, confirm who will be named as IOR, and that the agent, bond and number are in place.

7. Check the contract for duty refunds

CBP refunds IEEPA duties only to the importer of record or the notify party named on CBP Form 4811, and that party needs US bank details in its ACE Portal account. When the seller pays the duty, the contract should say who keeps any duty refund. Our US tariff refund guide covers how IEEPA refunds work.

Four checks before you quote

Before you send a quote, check at least these:

1. Does the quote name an Incoterms 2020 rule and a named place?

2. Under DDP, who is the importer of record, and are the resident agent and bond ready?

3. Under DAP, is the buyer set up to clear US customs as importer?

4. Have old contracts that say DDU been rewritten as DAP or DDP?

Wrap-up

DDP puts US clearance and duty on the seller. DAP puts them on the buyer. DDU is not in Incoterms 2020. Choosing a term is, in practice, choosing who will be the US importer.

LinkONE supports Korean brands with US customs clearance and import compliance, including import requirement and document review, from its own warehouse in Fullerton, California.

In the end, who pays US duty is set by the Incoterms rule and the importer of record in the contract, not by the unit price.

Frequently Asked Questions

Who pays US duty under Incoterms DDP?

The seller. Under this rule the seller carries out and pays for import clearance (ICC Academy). CBP holds the importer of record ultimately responsible for all duties, taxes and fees (CBP).

Who pays duty under DAP Incoterms?

The buyer. Under DAP the seller delivers ready for unloading at the named place, and the buyer handles and pays for import clearance (ICC Academy).

Is DDU still an Incoterm?

No. DDU is not one of the 11 Incoterms 2020 rules (ITA). Industry sources describe DAP as the rule that took its place (Franzosini).

Can a foreign seller be the importer of record in the US?

Yes. A nonresident corporation needs a resident agent in the state of the port of entry and a CBP Form 301 bond with a resident corporate surety (19 CFR 141.18). Without an IRS number, it can request a CBP-assigned number on CBP Form 5106 (CBP).

Sources

Fees and rules in this post are as of October 2026.

-LinkONE-