Your US Buyer Won't Pay, and the Goods Shipped DDP: What Chinese Manufacturers Should Know Before Trying to Collect
Your US buyer owes you money. The goods shipped months ago, the buyer received them, and the payments stopped. You have invoices, shipping records, and a long WeChat history of promises. Now you're thinking about lawyers, lawsuits, and how to force payment from a company on the other side of the Pacific.
Before you do any of that, look at how the goods entered the United States.
If you sold on DDP terms, or if a freight forwarder or trading company handled the US import for you, there's a question that matters as much as the unpaid balance: what was declared to US Customs when your goods crossed the border? The declared values, the product descriptions, the country of origin, and the name of the importer. If any of that was wrong, your collection problem sits on top of a customs problem. And pursuing the first can expose the second.
This article explains why, and what a careful manufacturer should understand before making the next move.
How Goods Shipped DDP Usually Enter the United States
Over the past few years, as US tariffs on Chinese goods climbed, DDP shipping became a popular selling point. Under DDP terms (Delivered Duty Paid, one of the standard Incoterms), the seller is responsible for getting the goods through US customs and paying the duties, and the US buyer just receives delivery.
In practice, many DDP arrangements involve a chain of intermediaries. The manufacturer hands the goods to a freight forwarder. The forwarder or an affiliated logistics company arranges the US entry, often in the name of a third party who serves as the importer of record. The manufacturer may never see the entry documents. The all-in DDP price the buyer agreed to pay sometimes only works if the duties actually paid are lower than the duties that would be owed on an accurate declaration.
That gap gets closed in predictable ways: declared values below the real transaction price, product descriptions that map to lower-duty classifications, or routing that obscures Chinese origin. A Financial Times investigation and multiple US law firm reports have described these practices becoming widespread in DDP shipping from China as tariffs rose. Sometimes the manufacturer knows the details. Sometimes the manufacturer signed off on a price and let the forwarder handle the rest, without asking questions that, in hindsight, should have been asked.
Then the buyer stops paying, and the manufacturer wants to collect. Here's why that's more complicated than it looks.
US Customs Law Reaches Further Than the Importer of Record
Many manufacturers and forwarders assume that whoever was named as importer of record carries all the customs risk. That assumption is wrong.
The main US customs penalty statute, 19 U.S.C. § 1592, applies to any "person," not just the importer of record. It prohibits entering or introducing merchandise into US commerce, or attempting to, by means of any material false statement, document, or omission. It also separately prohibits aiding or abetting anyone else in doing so. And it applies whether or not the US government actually lost any duty revenue.
The leading case is United States v. Trek Leather, Inc., 767 F.3d 1288 (Fed. Cir. 2014). There, the full Federal Circuit held that an individual who provided undervalued invoices used to make customs entries had "introduced" the goods into US commerce and was personally liable under the statute, even though a corporate entity, not the individual, was the importer of record. The court read "introduce" broadly to cover actions taken before and around the formal entry, not just the filing itself.
For a Chinese manufacturer or freight forwarder, the practical takeaway is this: providing invoices, values, descriptions, or origin information that ends up in a false customs entry can create exposure under US law, even if your name appears nowhere on the entry paperwork. How serious that exposure is depends heavily on the facts, including what you knew and what role you played.
The penalties scale with culpability. For negligence, the statute authorizes penalties of up to two times the unpaid duties, or up to 20 percent of the dutiable value where no duties were lost. For gross negligence, up to four times the unpaid duties, or up to 40 percent of the value. For fraud, the penalty can reach the domestic value of the merchandise itself. On top of penalties, the government can demand the unpaid duties, and these claims generally carry a five-year limitations period, which for fraud generally runs from when the government discovers the violation. Across several years of shipments, the numbers add up quickly.
The Enforcement Climate Has Changed
For a long time, customs violations were treated mainly as a civil and administrative matter. That has changed.
In 2025, the US Department of Justice identified trade and customs fraud as one of its priority areas for white-collar criminal enforcement, and the cases since then have matched the rhetoric. Recent federal indictments involving duty evasion on Chinese goods have charged not only US importers and executives but also, in at least one case, a Chinese national and a China-based company, with charges including conspiracy, wire fraud, smuggling, and entry of goods by means of false statements. An indictment is only an accusation, and every defendant is presumed innocent. But the trend is clear: the US government is willing to charge parties outside the United States, and it's treating undervaluation and origin schemes as crimes, not paperwork problems.
Two other enforcement channels are worth knowing about. Under the Enforce and Protect Act (EAPA), US Customs investigates allegations that imports evaded antidumping or countervailing duties, and those investigations frequently examine the foreign manufacturer's role and records. And under the False Claims Act, private whistleblowers can file suit over customs fraud and share in the government's recovery. A former employee, a competitor, or a buyer who knows how your goods entered the country can start that process.
That last point deserves emphasis, because it connects directly to your unpaid invoice.
What Chasing Payment Can Expose
Think about what your buyer knows. If the buyer negotiated an all-in DDP price that was only achievable through understated declarations, the buyer likely understands, at least in outline, how the goods entered. Some buyers know precisely, because the arrangement was their idea.
Now think about what a collection effort involves.
A US lawsuit opens discovery, the process where each side must produce documents and answer questions under oath. In a payment dispute over imported goods, the transaction documents are at the center of the case: your commercial invoices, the shipping records, the entry documents, and the communications about pricing and logistics. If there are two sets of invoices, or if the values declared to Customs don't match the values in your claim, that contrast will surface. You'd be proving your damages with the same documents that show how the goods were declared.
A buyer with something to point to rarely stays quiet about it. In our experience, and in the patterns US trade lawyers have been describing publicly, buyers in these disputes use the customs issue as leverage: as a defense, as a counterclaim, as a reason you should accept less, or as something they might bring to the government's attention. Whether any particular threat has legal force depends on the facts. But the leverage is real, and it's often the reason these negotiations feel one-sided.
Even steps short of a lawsuit deserve care. A demand letter that recites the transaction history, or an angry message that describes the arrangement, becomes a written record. Anything you put in writing can later become evidence, in a collection case or in an enforcement matter.
None of this means collection is impossible. It means the order of operations matters. You need to understand your exposure before you decide how hard to push, in what forum, and on what record.
The Contract Problem: You May Not Have a Direct Claim Against the Buyer
There's a second complication in many of these arrangements. If your sale ran through a trading company, a forwarder's affiliate, or some other intermediary, you may have no contract directly with the US end buyer at all. Your contract claim may technically be against the intermediary, which may be a small company with few assets, sometimes one that exists mainly on paper.
Whether you can recover from the end buyer without a direct contract depends on the specific facts and on state law, and sometimes there are viable paths. But every one of those paths requires laying out exactly how the goods moved, who agreed to pay whom, and how the money was supposed to flow. That's the same story that shows how the entries were structured. The legal theory and the exposure analysis can't be separated, which is why they should be evaluated together, at the start, by someone looking at the whole picture.
For more on the general landscape when relationships with US buyers break down, including US lawsuits, arbitration clauses, and buyer bankruptcy, see our companion guide on disputes with US buyers for Chinese suppliers. For how customs, tax, and personal liability issues interact in US-China ventures more broadly, see our overview of penalties in US-China business ventures.
What a Careful Assessment Looks Like
When a manufacturer or forwarder in this situation comes to us, the work starts before any demand letter goes out. The questions include: what was actually declared on the entries, and by whom. What your documents show, and whether they're consistent. What role you played in the declarations, and what the communications reflect. Whether the buyer, the intermediary, or the forwarder carries the greater share of the problem. What the realistic recovery is, against whom, and in what forum. And whether your continuing shipments to other US customers, through the same channels, are creating new exposure while you focus on the old invoice.
Sometimes the answer is that the entries were clean, the claim is strong, and collection should proceed. Sometimes the answer is that pursuing this buyer, on this record, would cost more than it could recover, and the better use of resources is fixing the go-forward arrangement. Often the answer is in between: there's a path to recovery, but it has to be built carefully, with full awareness of what the other side knows.
What we'd caution against is the middle course many companies take by default: sending escalating demands, sharing documents informally, and threatening suit, all before anyone has looked at the entries. That course creates a written record and shows your hand, without the benefit of knowing what your hand actually is.
Frequently Asked Questions
We were never the importer of record. Can US Customs really pursue us?
Potentially, yes. The customs penalty statute applies to any person who enters or introduces goods by means of material false statements or omissions, or who aids or abets someone else in doing so. In Trek Leather, the Federal Circuit held an individual personally liable for providing undervalued invoices used in entries made in a corporate importer's name. Whether the statute reaches a particular foreign manufacturer or forwarder depends on the facts, including what information you provided and what you knew. As a practical matter, the US government's ability to collect from a company with no US presence is a separate question, but exposure can affect your US assets, your US receivables, and your ability to do future US business.
The forwarder arranged everything and told us it was legal. Doesn't that protect us?
It helps less than you'd hope. Reliance on someone else's assurances may bear on your level of culpability, which matters because the penalty tiers (negligence, gross negligence, fraud) carry very different consequences. But it doesn't automatically eliminate exposure, especially if the pricing itself made the arrangement hard to explain, or if the documents you provided were inaccurate. The forwarder, meanwhile, has its own exposure, and its interests may not align with yours if enforcement attention arrives. What was said, and what's in writing, matters a great deal here.
Can we just write off this buyer and quietly keep shipping to our other US customers?
Writing off one buyer doesn't resolve entries that were already made, and the limitations period for customs penalty claims generally runs five years, longer in practical terms for fraud, which generally runs from the government's discovery. If your other shipments move through the same DDP or forwarder channels with the same practices, the exposure is growing, not shrinking. The go-forward structure deserves at least as much attention as the old receivable.
Should we send a demand letter ourselves before spending money on a lawyer?
In this specific situation, we'd suggest caution. A demand letter is a written record, and in these disputes the transaction details cut both ways. Buyers who know how the goods entered sometimes respond to demands by raising the customs issue, and an exchange of accusations in writing can make everything that follows harder. Having counsel assess the record first doesn't mean you can't demand payment. It means you demand payment knowing what's behind you.
Is it still worth pursuing payment at all?
Often, yes. US buyers with real operations have US assets, and US legal process can reach them. If your contract has an arbitration clause, an award may be enforceable against the buyer's assets. Some cases settle quickly once the buyer sees the claim is professionally presented. The point of this article isn't that you should give up on the money. It's that the decision to pursue it, and how, should be made after an honest look at the entries, not before.
About Chang Law Group
Chang Law Group represents importers and businesses engaged in US-Asia trade. Attorney Jeff Chang is admitted to practice before the US Court of International Trade, the US District Court for the District of Massachusetts, and Massachusetts state courts. The firm assists clients with various business matters, including cross-border commercial disputes, customs and trade enforcement matters, US litigation, and business transactions between US and Chinese companies.
Contact:
Phone: (617) 307-1238
Email: info@jchanglaw.com
WeChat: ChangLawGroupLLC
Chang Law Group LLC: One Marina Park Drive, Suite 1410, Boston, MA 02210
Disclaimer: This article provides general information about US customs law and cross-border payment disputes and is not legal advice. It does not create an attorney-client relationship, and no attorney-client relationship exists until we agree in writing to represent you. Laws and enforcement practices change frequently and apply differently to different facts. If you have questions about your specific situation, contact Chang Law Group to discuss how we can help.
