INCOTERMS Integrity & Importer Risk

Advisory Notice: “mDDP” / “DDP” Offerings and Potential Tariff-Exposure: INCOTERMS Integrity & Importer Risk

Over recent months, we at Fleischer have received an increasing number of inquiries from importers whose overseas suppliers are presenting a term labelled “mDDP” (modified Delivered Duty Paid) or shifting longstanding delivery arrangements into “DDP”-type structures which highlights the need to discuss INCOTERMS Integrity & Importer Risk. These proposals often present an attractive landed-price solution by rolling duties and fees into a single cost.

While this may seem convenient, we are observing a few indicators suggesting that such arrangements warrant careful review: they may obscure the true value of goods, complicate the role of the Importer of Record, and raise questions under U.S. customs law. Importantly, “mDDP” is not part of the recognized International Chamber of Commerce Incoterms® framework and does not hold a defined status under U.S. customs regulations.

Our internal assessment, backed by recent communications with U.S. Customs and Border Protection, indicates that U.S. authorities are paying closer attention to shifts in delivery terms, unexplained value or origin changes, and DDP-contracts that may misrepresent which party is responsible for duties. While some cases may reflect legitimate commercial evolution, each presents a potential compliance risk including: audit exposure, duty shortfall, enforcement action or reputational impact.

Fleischer’s recommendation is clear: do not accept arrangements identified as “mDDP,” or any non-standard variation of “DDP,” unless the terms are fully documented, your position as Importer of Record is clear, and the duty/fee breakdown is transparent.

Why This Matters

• Standard Incoterms® allocate cost, risk and responsibility clearly. Non-standard terms such as “mDDP” may mask the true IOR and duty obligations.

• CBP and the trade community are placing increased attention on entries with unusual Incoterm changes, value deviations, origin routing through atypical countries, or inconsistent duty/tax treatment.

• CBP is actively tracking shipments exhibiting unusual terms, value deviation, origin routing or unnatural Incoterm change.

  • Trade Update GHY International

• Even when a supplier states “we cover duties,” U.S. law may still hold the purchaser responsible if the IOR function is misallocated or duties are incorrectly declared.

  • Why Following Your Chinese Supplier’s Tariff Advice Could Land YOU in Jail: Part 2, It Will Likely Be Your DDP Deal That Will Put You There

  • Buyer Beware: The Hidden Risks of Unpaid Tariffs Under DDP

What to Watch For

• Use of “mDDP,” “modified duty paid,” or similar non-standard delivery terms.

• A sudden change in delivery terms (for example: switching from FOB/FCA to DDP) without clear, commercial rationale.

• Supplier claims to absorb or waive duties or taxes — which may be indicative of underlying undervaluation or classification risk.

• Supply-chain routing that lacks apparent commercial logic (e.g., goods transiting through a “friendly” country with no substantive change).

  • Sandler, Travis & Rosenberg, P.A., CBP Identifies Red Flags, best Practices on Transshipping

• Invoices, broker filings or classification data that do not align with your procurement contract or with recognized Incoterms® rules.

Your Recommended Actions

1. Review all supplier agreements — ensure the delivery terms are among the recognized Incoterms® (EXW, FCA, FOB, CIF, CPT, CIP, DAP, DPU, DDP, FAS) and that roles and responsibilities are clearly defined.

2. Demand transparency — require your supplier to identify the U.S. Importer of Record, name the customs broker, supply a duty/fee breakdown, and provide classification and valuation support.

3. Monitor supplier behavior — track when delivery terms or patterns change, especially if inconsistent with historical practices; apply enhanced audit and risk-control measures if so.

4. Strengthen internal controls — integrate procurement/compliance checks for Incoterm changes, value/routing shifts and flagged supplier behavior into your standard review process (including retention of records as required under 19 CFR § 163.4.

5. Consult early — if you encounter non-standard terms or unclear responsibility for duties, engage your customs broker or legal counsel promptly.

Using non-traditional or ambiguous delivery terms may appear to reduce cost — but it also introduces real financial, operational and reputational risk. Make delivery terms, IOR responsibility, classification and duty flows part of your due diligence program.