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Tariffs and shipping terms are critical components of international trade, directly impacting profitability and operational efficiency. Tariff Management refers to strategies companies employ to navigate customs regulations, minimize duty costs, and ensure compliance with import/export rules. Conversely, Delivered Duty Paid (DDP) is an Incoterms® 2020 shipping term where sellers assume responsibility for delivering goods to buyers, including all duties, taxes, and logistics. Comparing these concepts helps businesses optimize trade strategies, allocate risks effectively, and streamline global supply chains.
Definition: Tariff Management encompasses processes to calculate, classify, and minimize tariffs on imported/exported goods while ensuring regulatory compliance.
Key Characteristics:
History: Tariffs date back to early trade barriers; modern management strategies emerged with globalization and digital tools for real-time compliance tracking.
Importance: Mitigates financial risks from duty miscalculations, ensures supply chain continuity, and enhances profitability through cost efficiency.
Definition: An Incoterms® shipping term where the seller delivers goods to the buyer’s destination, absorbing all costs (transport, insurance, duties, taxes).
Key Characteristics:
History: Introduced in Incoterms® 2020 to clarify seller obligations post-Brexit and global trade complexities.
Importance: Reduces buyer administrative burden but increases seller complexity and financial exposure.
Responsibility for Duties:
Scope:
Compliance Complexity:
Cost Allocation:
| Aspect | Tariff Management | Delivered Duty Paid (DDP) |
|---------------------|-----------------------------------------------|---------------------------------------------|
| Cost Efficiency | Reduces long-term costs through exemptions. | Predictable upfront pricing for buyers. |
| Risk Exposure | Buyer/seller shares compliance risks. | Seller bears financial and logistical risks.|
| Complexity | Requires expertise in customs/trade law. | Simplifies buyer operations but complicates seller processes.|
Choose Tariff Management if you:
Opt for DDP if you:
Tariff Management and DDP address distinct challenges in global trade. While Tariff Management empowers companies to optimize costs through strategic compliance, DDP offers operational ease but shifts financial risks to sellers. Businesses must weigh their resources, risk tolerance, and supply chain goals when selecting between these strategies.