Selling furniture to U.S. retailers FOB vs. DDP: who is importer, who pays the tariffs and what a DDP contract should say
Under FOB origin terms the U.S. retailer is usually the importer of record and handles duties, clearance and CPSC eFiling. Under DDP, the factory or its U.S. company is the importer and owns the duties, IEEPA refunds and compliance. A factory that manufactures abroad with no U.S. office or staff generally owes no U.S. income tax either way.
Under FOB origin terms, the U.S. retailer is usually the importer of record and handles duties, customs clearance and CPSC eFiling. Under DDP, the factory or its U.S. company is the importer, and the duties, any IEEPA refunds and the compliance filings are its own. A factory that manufactures in China or Vietnam with no U.S. office, employees or contract-signing agent generally owes no U.S. income tax under either term; what changes the answer is a U.S. warehouse, U.S. staff or a U.S. company.
What's the real difference between FOB and DDP?
Under FOB (Free On Board) at the origin port, the factory's delivery is complete once the goods are loaded on the ship. Ocean freight, insurance, import clearance and duties are the buyer's. Large U.S. furniture retailers often buy this way, booking their own freight and acting as importer.
Under DDP (Delivered Duty Paid), the factory delivers to a named place in the U.S. and pays the duties as importer. The DDP price includes ocean freight, duties, clearance and inland freight.
The key difference isn't freight; it's who is the importer of record. The importer of record is legally responsible for declared value, classification, country of origin, duty payment and compliance filings. Under DDP, a foreign factory can act as a nonresident importer, which requires a customs broker, a customs bond and importer registration, or it can set up a U.S. company to import.
Which tariffs apply to furniture imports in 2026?
As of November 2026, these are the main tariffs that hit furniture. The actual rate depends on the tariff classification and country of origin, so check the latest CBP and USTR notices.
Section 232. A September 29, 2025 proclamation imposed 25% on upholstered seating with wooden frames, kitchen cabinets and vanities from October 14, 2025, regardless of origin. Increases to 30% and 50% scheduled for January 1, 2026 were postponed to January 1, 2027 by a December 31, 2025 proclamation.
Section 301 on China. Most China-origin Chapter 94 furniture is on List 3 at 25%.
Section 301 forced-labor tariffs. From July 24, 2026: 12.5% on China, Vietnam and others, and 10% on Malaysia, Indonesia, Cambodia and others. Goods already subject to Section 232 are excluded; whether it stacks on the existing China Section 301 tariffs is per CBP guidance. Importers have sued in the Court of International Trade.
Antidumping duties. Wooden bedroom furniture from China is under an antidumping order with a China-wide rate of 216.01%, and mattresses from several countries carry antidumping duties.
IEEPA refunds. On February 20, 2026 the Supreme Court held that IEEPA doesn't authorize tariffs. IEEPA duties already paid can be refunded through CBP's CAPE function, but only the importer of record or its broker can file. Under FOB the refund belongs to the retailer; under DDP it's yours.
Does DDP put the factory into U.S. income tax?
Usually not; what changes the answer is a U.S. warehouse and U.S. staff. Under §863(b), income from selling inventory the taxpayer produces is sourced where it's produced, so furniture made in China or Vietnam generally produces foreign-source income, and delivering through an independent customs broker and freight forwarder generally doesn't create a U.S. place of business. Renting a U.S. warehouse and shipping from U.S. stock, hiring U.S. employees, or having someone sign contracts and set prices for the factory calls for a fresh look at effectively connected income and permanent establishment, and Vietnam has no U.S. tax treaty in force. The retailer is paying for goods; the factory provides a W-8BEN-E and generally faces no withholding and no 1099. The full analysis is in our Rooms To Go supplier guide.
A DDP pricing example
Example (hypothetical numbers, to show the method): an upholstered sofa with a wooden frame sells for $200 FOB. To quote DDP, the factory adds duties and freight. Assume duties of 25% of the $200 customs value, or $50, and $15 a sofa for ocean freight, clearance and inland freight. The DDP price is $265 and the factory still nets $200.
If the contract fixes the price for a year and duties move from 25% to 37.5%, duties become $75 a sofa and the factory nets only $175, a $250,000 difference on 10,000 sofas. If duties fall or a refund comes through, the importer keeps that too. A DDP contract should spell out who the importer of record is, how prices adjust when duties change, who keeps duty refunds, and who supplies the CPSC certificate data.
Sales tax, 1099s and the books
A sale to a retailer is a sale for resale, so no sales tax is charged. Under FOB the sale happens abroad and U.S. sales tax isn't involved. Under DDP or from a U.S. warehouse, collect the retailer's resale certificate (Florida DR-13, Georgia ST-5, Texas 01-339, North Carolina E-595E and so on) and register where your warehouse requires it. Wholesale payments don't run through a payment platform, so there's generally no 1099-K.
In the books, duties go into the importer's inventory cost and become cost of goods sold when the goods sell; duties in a DDP price are the factory's cost. IEEPA refunds are booked according to whether the related goods have been sold.
How we can help
For the vendor model at retailers like Rooms To Go, product compliance, entity choice and platform comparisons, see our Rooms To Go supplier guide; for the tariff timeline and inventory cost, see the Amazon FBA guide. YCL helps factories compare the tax results of FOB, DDP and a U.S. subsidiary before taking orders, and handles entity choice, Form 5472, sales tax registration and bookkeeping. Product compliance and contracts are for testing labs and attorneys, and results depend on your facts. Start with a 15-minute free consultation, or reach us on WeChat at YCLUSA.
Sources
Holland & Knight: New Section 301 Forced-Labor Tariffs Imposed on 60 Countries (July 2026)
Cornell LII: 26 U.S. Code §863
Cornell LII: 26 U.S. Code §865
IRS: U.S.–China Income Tax Treaty
Last checked: November 9, 2026
This article is general tax information, not tax, legal or customs advice for any individual or company. Tariff rules change often; check the latest CBP and USTR notices.
Questions this article answers
Who pays the tariffs when furniture is sold FOB?
Under FOB origin terms the U.S. buyer is usually the importer of record and pays duties, clears the goods and handles CPSC eFiling. The factory supplies accurate invoices, packing lists, origin information and certificate data. Refunds of IEEPA duties can be claimed only by the importer of record.
Does a Chinese factory selling DDP to a U.S. retailer owe U.S. income tax?
Generally not, as long as it has no U.S. office, employees or person who signs contracts for it. Income from inventory the company produces is sourced where it's produced, so furniture made in China is foreign-source. Delivering through independent brokers and forwarders usually doesn't change that; a U.S. warehouse or U.S. sales staff calls for a fresh review.
Are Vietnamese and Chinese factories treated the same for U.S. tax?
The domestic rules are the same, but Vietnam has no U.S. tax treaty in force. The 2015 U.S.–Vietnam treaty still isn't in force as of November 2026, so a Vietnamese company with a U.S. place of business doesn't get the treaty rule that storage and delivery facilities aren't a permanent establishment, and dividend withholding is 30%.
What should a long-term DDP contract cover?
Who the importer of record is, how prices adjust when duties change, who keeps duty refunds, and who provides CPSC certificate data and UFLPA tracing documents. Furniture tariffs changed several times in 2026, and a fixed-price DDP contract can leave the factory carrying every change.
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