What is the meaning of Free on Board (FOB) and Cost Insurance freight (CIF) with regard to tariffs and international trade?

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Free On Board (or Freight On Board, or FOB) refers to a type of shipment of goods and who is responsible for shipping, liability and other costs. Internationally, the term usually indicates that the buyer pays all shipping and transportation expenditures to the place where the shipment originates. The buyer then pays all other expenses (including insurance, transportation and unloading costs) to the place of destination. In North America, however, different rules often apply.

CIF (Cost, Insurance and Freight) is an incoterm (International Commercial terms) used worldwide in financial sales and transactions. It is virtually the same as FOB and CFR (Cost and Freight) in which the seller pays for the cost of the product to its destination point. However, unlike FOB and CFR, CIF requires that the seller must also purchase buyer's insurance (on maritime shipments only).

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