EXW, FOB or DDP From Korea: Who Clears US Customs on Your Cosmetics?

Your first production quote from a Korean ODM usually shows a unit price followed by three letters: EXW, FOB or DDP. Those letters decide more than shipping. They decide who files your goods with US Customs, who writes the duty check, and who gets the letter when FDA stops a carton at the port.

Below are the three terms side by side, the setup you need before a first shipment, and five steps to lock the right term into your PO. For the whole factory-to-warehouse process, see our guide to importing Korean cosmetics into the US.

Who Clears US Customs Under EXW, FOB and DDP?

Under EXW and FOB, you clear US customs. Your brand acts as importer of record, usually through a licensed customs broker, and pays the duty. Under DDP, the seller delivers the goods cleared for import with duty paid, so the supplier or its US agent acts as importer of record.

Incoterms are the International Chamber of Commerce's standard trade terms. Each one sets where risk passes, who books the main freight and who handles customs on each side. An importer of record is the party that makes the US entry and answers for its duty, value and admissibility.

Sources: ICC Academy on EXW and DDP and on FOB and container cargo; CBP on who may make entry.

The Importer of Record Carries the FDA Risk for Cosmetics

The importer of record is the party FDA and CBP deal with when a cosmetics entry has a problem. FDA reviews imported cosmetics at entry and can detain a shipment that appears adulterated or misbranded. The importer then has to show the product belongs on the US market.

FDA sends a Notice of Detention and Hearing with a respond-by date to the importer, owner or consignee. The importer or its customs broker can then submit evidence, called testimony, through FDA's ITACS system. If the response does not show compliance, FDA refuses admission and the goods have to be exported or destroyed (FDA).

A misbranding charge usually starts on the label: a drug-type claim, a missing ingredient list or a missing US contact. That is why our US label rules for Korean skincare belong in the same folder as your shipping terms.

Two duties stay with your brand under every trade term. If your name is on the label, you are the responsible person, and the MoCRA product listing, adverse event reports and safety records stay with you (see the MoCRA duties of the responsible person). And a broker may file the entry, but you supply the invoice, product facts and label behind it.

What Do You Need Before the First Shipment Lands?

Under EXW or FOB, you need four things before the goods leave Korea. They are a customs broker with your power of attorney, a customs bond, an ISF filer for ocean cargo and an FDA-ready file for each SKU. Under DDP you need the same FDA file, plus written proof of who holds the other three.

1. A customs broker. CBP lets the owner or purchaser of the goods make entry, or a licensed broker acting for them under a power of attorney. A freight forwarder with no stake in the goods cannot make entry in its own name.
2. A customs bond. Shipments valued at $2,500 or less can usually use informal entry (19 CFR 143.21). Commercial loads above that go through formal entry, which needs a bond (19 CFR 142.4). Your broker can tell you whether a single-entry or continuous bond fits your plan.
3. An ISF filer for ocean freight. The importer, or its agent, must file the Importer Security Filing at least 24 hours before the cargo is loaded on the vessel in Korea (19 CFR Part 149). The factory supplies much of the data, such as the manufacturer and the container stuffing location.
4. An FDA-ready file per SKU. Keep the final label, the full ingredient list, the product listing details and your cosmetic-or-drug call in one place. Our FDA requirements guide for Korean skincare covers each item.

Five Steps to Lock the Trade Term on Your First PO

Decide who will be importer of record first, then pick the term that matches. Write the term, the named place and the Incoterms version into the purchase order, so nobody reads the three letters differently.

1. Decide the importer of record. If you plan to keep importing under your own brand, being the importer keeps the entry records, the duty history and the FDA contact in your hands.
2. Pick the hand-off point. For container loads, ask for FCA at the container terminal rather than FOB. ICC points out that under FOB the seller keeps the risk until loading, which it no longer controls once the container sits at the port (ICC Academy).
3. Name the place and the version. "FCA Busan, Incoterms 2020" means one thing. "FOB" on its own leaves the port, the version and the cost split open to argument.
4. Split the documents. Agree who issues the commercial invoice, the packing list and the certificate of origin. Make sure the invoice states the price basis your broker needs to declare value.
5. Write an FDA hold clause. State who pays storage, relabeling or re-export if FDA detains the goods, and how fast the factory sends formula and test documents for your response.

On a typical ocean shipment, each job lands at a predictable point:

• Before the deposit: trade term, broker, bond and FDA file.
• At booking: the factory sends ISF data to whoever files it.
• A day before loading: the ISF goes in.
• At arrival: entry filed, duty paid, FDA review.
• After release: file the entry records and check duty against your landed cost.

Is DDP Safer for a First Order?

DDP is simpler, not automatically safer. It moves the customs work to the supplier side, but your brand's goods enter the US on someone else's entry, and you still answer for the label and the listing.

DDP is the only one of the three terms where the seller pays US duty, so the price has to carry it. Since July 24, 2026, Korean cosmetics face a combined 12.5% rate: the MFN duty plus the Section 301 tariff from the forced-labor action (Federal Register). Our tariff and HTS guide for Korean cosmetics covers classification.

Before you accept a DDP quote, get these answers in writing:

• Whose name and importer number go on the US entry?
• Who holds the customs bond and files the ISF?
• Which charges does the price include: duty, the Section 301 tariff, broker and customs fees?
• Who responds, and who pays, if FDA detains the goods?
• Will you receive a copy of the entry summary for your records?

Valuation is the quiet risk. US duty is assessed on transaction value, which by statute excludes international freight and insurance when they are included in the price (19 U.S.C. 1401a). A DDP price bundles those costs with the duty, so the importer has to separate them with proof. A value declared too low is still an entry error on goods carrying your brand.

Five Incoterm Mistakes on Korean Cosmetics Orders

These five slips are easy to make on a first order. Each one has a simple fix.

• FOB on a container the factory drops at a terminal. Use FCA with the terminal as the named place instead.
• "FOB Destination" on an international PO. That phrase comes from US domestic sales practice. It is not an Incoterms rule and says nothing clear about customs.
• EXW to shave the unit price. Under EXW the buyer handles Korean export clearance. ICC points buyers who expect trouble there to FCA, where the seller clears the goods for export.
• A term with no place or version. Write "Incoterms 2020" and a named place every time.
• A DDP importer with no stake in the goods. CBP does not let a nominal consignee with no right, title or interest in the goods make entry in its own name. Ask how the supplier's importer qualifies.

Which Trade Term Fits Your Order?

Choose FCA or FOB with your own broker when you plan to keep importing and want control of the entry. Choose DDP for a small first shipment only when the supplier names a qualified importer of record in writing and shares the entry papers.

• You plan repeat orders under your brand: FCA or FOB, with you as importer of record.
• You have no broker yet: appoint one before you pay the production deposit, not after the goods ship.
• You are testing one small air shipment: DDP can work if the five DDP answers above come back in writing. Our air vs ocean freight decision guide covers the mode choice.
• Your quote shows one price and no term: ask for the term before you compare factories, since an FOB price and a DDP price are not the same number. Our list of ODM quote lines with bargaining room covers the rest of the sheet.

After customs come retail, Amazon and wholesale. Our playbook on how to sell Korean cosmetics in the US picks up from there.

Frequently Asked Questions

Can a Korean company be the US importer of record?
Yes, if it qualifies. CBP lets the owner or purchaser of the goods make entry, and a foreign company usually does so through a licensed US customs broker and a bond. Ask any DDP supplier to show how it qualifies before you accept the quote.

Does DDP mean my brand has nothing to do with FDA?
No. DDP moves customs clearance and duty to the seller side. Your brand still owns the label and the claims, and as the responsible person on the label it keeps the MoCRA product listing, adverse event reporting and safety records.

Is the FOB price the same as the customs value?
Not always. US duty is based on transaction value, which excludes international freight and insurance. An FOB price already leaves out the ocean leg, while a DDP or CIF price bundles it in and needs proof before it can be deducted. Your customs broker makes the final call.

Who files the ISF on a DDP shipment?
The ISF importer files it, usually the party with the right to make entry, or its agent. On a DDP shipment that is normally the supplier side. Ask for confirmation that it went in at least 24 hours before loading, because a late or missing ISF can lead to CBP penalties.

By Liz Song, K-beauty sourcing consultant.