Duty Drawback
Recover up to 99 percent of the duties, taxes, and fees you paid on goods that were later exported, destroyed, or used to make something that is exported.
Best for: Importers who export, or whose customers do
How it works
The order the work actually runs in.
- 1
Identify which imported goods leave the country again, whether as-is, as a component of something else, or destroyed under supervision.
- 2
Choose the drawback type that fits: unused merchandise, manufacturing, or rejected merchandise.
- 3
Build the trace from import entry to export event. This is the real work and the reason most eligible claims are never filed.
- 4
File the claim, including retroactive claims covering entries from the previous five years.
- 5
Apply for accelerated payment so refunds arrive before liquidation rather than years after it.
A worked example
What the strategy looks like once you put numbers on it.
Five years of exports that had never been claimed
A components distributor imported $9M a year and re-exported roughly 18 percent of it to Canadian and Mexican customers, without ever filing drawback.
The distributor had always treated duty as a sunk cost. Nearly a fifth of what it imported was shipped straight back out to customers across the border, with the duty never recovered.
Import entries were matched to export documentation across the previous five years, and an unused merchandise drawback program was set up so future exports are claimed on a rolling basis rather than in an annual scramble.
About $2.0M came back on the first retroactive filing, and roughly $411k a year is now recovered on an ongoing basis. Accelerated payment brought those refunds forward by a considerable margin.
Figures are illustrative math on a representative volume, not a specific client engagement. Your own numbers depend on your product, your codes, and current policy.
Before you commit
What this needs from you, and where it goes wrong.
What it takes
- Import entry data and export proof that can be matched, unit by unit or through an accepted accounting method
- A five-year look back at what you have already shipped out
- A named owner for the filing, whether in-house or a drawback specialist
- Patience on the first claim. Setup is front-loaded, then it becomes routine.
Watch-outs
- Drawback is a documentation exercise. If you cannot trace import to export, the claim will not survive review.
- Not every duty is refundable. Section 301 duties are generally eligible, Section 232 duties are not, so confirm what applies to your entries.
- Claims run on deadlines tied to the export date. Every month you wait, part of the five-year window drops off the back.
Would this one work for your product?
Send us your HTS codes and volumes. We will tell you whether this strategy applies to you, what it is worth, and what it takes to put in place.