Definition
What Is Duty Drawback?
Duty drawback is a US Customs program that refunds 99% of customs duties — including Section 301 and IEEPA tariffs — on imported goods that are subsequently exported, used in exported products, or destroyed under CBP supervision. The legal basis is 19 USC § 1313 and the program has existed in US law since 1789.
The three types of drawback
Manufacturing drawback — imported components are used to make a product that is then exported (the most common type). Unused merchandise drawback — imported goods are exported in essentially the same condition, with commercially interchangeable substitution allowed. Rejected merchandise drawback — imported goods are defective or non-conforming and are exported or destroyed. Each type has its own filing rules under 19 CFR Part 190.
What duties are recoverable
Drawback recovers 99% of base HTS customs duties, Section 301 tariffs, Section 232 steel and aluminum tariffs, IEEPA tariffs, and the Merchandise Processing Fee (MPF, subject to statutory limits). The 1% retention is a CBP administrative fee under the Trade Facilitation and Trade Enforcement Act of 2015.
The 5-year filing window
Claims must be filed within 5 years from the date of importation. This is a hard deadline — late claims are rejected regardless of merit. Drawback claims are filed electronically through CBP's Automated Commercial Environment (ACE) and require matching specific imported entries (with HTS code and entry number) to specific exports (with EEI filing or carrier waybill).
When drawback economics work
There are real administrative costs — tracking imports and exports, filing through ACE, maintaining records. Drawback specialists typically charge 20%–35% of recovery on contingency. The economics generally work above $50,000–$100,000 in annual recoverable duties; below that threshold, overhead consumes most of the benefit. With Section 301 routinely adding 25% to Chinese-origin goods, the threshold is reached faster than it used to be.
Frequently asked questions
- Are Section 301 and IEEPA tariffs eligible for drawback?
- Yes. CBP has confirmed that Section 301 duties qualify for the standard 99% drawback refund. IEEPA duties are also eligible under the same program. This is significant for importers of Chinese-origin components used in exported finished products.
- Do I need to export the same physical units I imported?
- Not necessarily. Unused merchandise drawback allows substitution of commercially interchangeable units — you can export a comparable item from a different shipment and still claim drawback against the imported entry. Manufacturing drawback follows the inputs through the production process; the exported finished product need not be physically identical to anything imported.
- Who actually files the drawback claim?
- Most companies work with a customs broker or law firm that specializes in drawback. Specialists handle the ACE filing, audit your import and export records to identify eligible claims, and respond to CBP correspondence. Most work on contingency, taking a percentage of recovery rather than charging upfront.
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