In this article:
What an importer of record actually does, and who is allowed to hold the role
How Incoterms decide who is the importer of record on a given shipment
Why tariff cost often disappears into your unit price without you seeing it
Who receives a refund when tariffs are reduced or struck down, and why it may not be you
What DDP terms actually shift, and what they do not
Five questions to ask about your own import structure
What Is an Importer of Record?
An importer of record (IOR) is the party responsible for making sure imported goods clear customs correctly. According to Foley & Lardner’s guidance on importer of record provisions, US Customs and Border Protection (CBP) requires the importer of record to handle a specific set of tasks: paying duties, taxes, tariffs, and fees, and making sure everything submitted to Customs is accurate.
Here is the part most suppliers miss: CBP allows the importer of record to be the owner, purchaser, or consignee of the goods, or a licensed customs broker or third-party logistics (3PL) provider acting on their behalf. That means the role is not fixed by law. It is a choice the parties to a contract make, often years before anyone thinks to ask about it.
If a co-manufacturer, distributor, or overseas vendor handles your customs entries, someone made a decision about who takes on that role. Most suppliers have never checked what their contracts actually say.
Importer of Record vs Consignee: What Is the Difference?
A consignee is the party a shipment is addressed to on the customs paperwork, often the buyer. The importer of record is the party legally responsible for the customs entry itself: filing the paperwork, paying the duties, and answering for any mistakes.
The two roles often sit with the same company, but not always. A consignee can receive goods without ever being the importer of record. That distinction matters because CBP holds the importer of record accountable, not whoever’s name is on the shipping label.
How Do Incoterms Decide Who Holds the Role?
Incoterms, the standardized shipping terms published by the International Chamber of Commerce, are usually where the importer of record question actually gets decided, even though most contracts never use that term directly.
There is one rule worth remembering. Under DDP (Delivered Duty Paid), the seller assumes every cost and risk, including tariffs. Under the other ten Incoterms, the buyer is responsible for paying tariffs.
Incoterm | Who typically pays tariffs | Who is typically the IOR | What to check in your contract |
DDP (Delivered Duty Paid) | Seller | Seller | Whether the seller is also named the legal IOR, and whether refund and liability terms are spelled out |
All other Incoterms (EXW, FOB, DAP, and the rest) | Buyer | Buyer, or a broker/3PL acting on the buyer’s behalf | Whether tariff cost is broken out as a separate line item, not buried in the unit price |
However, contract terms and the legal importer-of-record designation do not always line up. A vendor agreement can use DDP language while the actual customs entry names a different party as importer of record. That misalignment is where disputes tend to start.
Where Does Tariff Cost Hide in Your Unit Price?
When your vendor is the importer of record, tariff cost usually arrives embedded in what you pay them, undecomposed. You see one number. You do not see how much of it is tariff, how much is freight, and how much is the product itself.
That is a problem the moment tariff rates move. If you cannot see the tariff line, you cannot tell whether a price increase is a fair pass-through or padding.
The fix is simple to describe, harder to enforce: Ask vendors to break out tariff cost as its own line in cost data and quotes. Once it is visible, you can track it every time policy changes.
Who Gets the Refund When Tariffs Are Reversed?
This is where the abstraction turns into real money. When the US government struck down a set of tariffs imposed under the International Emergency Economic Powers Act, refunds with interest started flowing back to the businesses on record with CBP.
The catch, according to Frost Law’s analysis of the importer of record refund problem: Those refunds go to the importer of record, and the importer of record is frequently a customs broker, logistics provider, supplier, or distributor acting on behalf of a downstream business. The business that actually bore the cost, through a higher unit price, is often not the one CBP is paying back. Businesses that are not the importer of record typically do not have direct access to the entry filings or liquidation notices that would tell them a refund is even coming.
The Supply Chain Source covers this same dynamic on direct-import programs: If your customer was the importer of record on a flow, refund proceeds are likely to flow to them, not you.
If this describes your situation, a few things are worth doing:
Check your contracts for any language about refund pass-through.
Ask your intermediaries directly whether they have filed claims on entries covering your goods.
And for any new agreement going forward, get pass-through terms in writing with counsel. None of this makes recovery certain.
The legal questions around who is entitled to these funds are still being worked out, and this article is not a substitute for that analysis.
What Happens When DDP Terms Go Wrong?
DDP terms feel like they hand off the tariff problem entirely. They do not, at least not the way most buyers assume.
As NYU’s Program on Corporate Compliance and Enforcement outlines, regulatory liability under US law stays with the importer, regardless of who handles the logistics or who physically pays the duties. If a supplier underdeclares the value of goods or misclassifies them to reduce the tariff bill, the importer, often the buyer designated as importer of record under a DDP arrangement, inherits the fallout. That can include CBP penalties and, in more serious cases, False Claims Act exposure.
This is not a section where you want to be improvising. If your business relies heavily on DDP terms with overseas vendors, this is exactly what trade counsel is for.
What Questions Should You Ask About Your Import Structure?
A short checklist, worth revisiting whenever a vendor relationship or a tariff policy changes:
- Who is the importer of record on each of our import flows?
- What Incoterms govern each of our vendor relationships?
- Is tariff cost broken out in our cost data, or is it bundled into the unit price?
- What do our contracts say about refunds and pass-through if duties are reduced or reversed?
- Who inside our company owns the answers to these questions?
If you cannot answer most of these today, you are not alone. Most small to mid-market suppliers have never had to ask.
Frequently Asked Questions
Can a foreign company be the importer of record? Yes. BDO notes that the United States allows nonresident companies to register as the importer of record, which is not the case everywhere. That is one reason an overseas vendor can legitimately hold the role on a shipment into the US.
Does the 2026 USMCA review affect importer of record decisions? It could. Congress is required to conduct a formal review of the USMCA in 2026, and any changes to rules-of-origin requirements could shift which party owes what on North American import flows. Suppliers with Mexico or Canada exposure have another reason to double-check their current structure now, before the rules shift under them.
Do only large companies manage import structure actively? No, though large companies are often more visibly deliberate about it. Target’s fiscal year 2025 filing with the SEC disclosed its use of the first-sale rule, which lets importers in a multi-tier supply chain pay duties based on the earlier sale price rather than the final one. It is a reminder that sophisticated buyers treat import structure as something to manage on purpose. Smaller suppliers can apply the same instinct to a simpler question: knowing who their importer of record is on each flow they run.
The Takeaway
The importer of record designation was probably set years ago, for convenience, by whoever negotiated your first contract with a given vendor. It now quietly determines how much tariff cost you absorb without seeing it, whether you have any claim on a refund, and how much compliance exposure lands on your desk if something goes wrong.
Suppliers who cannot answer who their importer of record is, on which flows, under which terms, are not managing tariff risk. They are hoping someone else is doing it for them.
Getting tariff cost broken out in your data and understanding your partner structure will not solve every trade question, but it is the groundwork that makes the rest of this manageable. For a closer look at what that data discipline requires in practice, see IEEPA Tariff Refunds and the Data Requirements Behind Them on the Supply Chain Source.
This article is for general informational purposes only and does not constitute legal, tax, or customs compliance advice. Consult qualified trade counsel about the specific terms of your contracts and import structure.