10 Facts About US Duty Drawback You Didn't’ Know...And Could Save Your Company Millions.

1. The Recovery Process Has Been Simplified

The introduction of modernized drawback regulations under the Trade Facilitation and Trade Enforcement Act (TFTEA) in 2018 has revolutionized how companies approach duty recovery.

Before these changes, filing a drawback claim was a daunting, paperwork-heavy task. Today, the process is much more streamlined, with digital filing systems and clarified rules making it accessible to businesses of all sizes. These advancements have lowered the barrier to entry, enabling more companies to capitalize on this lucrative program.

2. Beyond Duties: Recover Taxes and Fees

Duty drawback isn’t limited to recouping import duties—it extends to other significant costs like the Merchandise Processing Fee (MPF) and Harbor Maintenance Fee (HMF).

These fees, often overlooked in traditional cost analyses, can add up to substantial sums over time. Including them in your drawback claims ensures a more comprehensive recovery, maximizing the financial impact on your bottom line.

3. Recover Up to 99% of Duties, Taxes, and Fees

The duty drawback program offers one of the most generous recovery rates in the realm of international trade, allowing businesses to reclaim up to 99% of eligible duties, taxes, and fees.

Unlike other tariff-saving programs, this near-total reimbursement ensures that companies recover the lion’s share of their costs, providing a significant boost to profitability. For industries operating on tight margins, this could mean the difference between staying competitive and losing ground.

4. Different Types of Duty Drawback

Duty drawback isn’t a one-size-fits-all program. It caters to different business models through multiple categories, the most common being:

• Unused Substitution Drawback: Ideal for companies importing and exporting goods classified under the same 8- or 10-digit Harmonized Tariff Schedule (HTS) code. This applies even if the specific items are not identical, provided the classification aligns.

• Manufacturing Substitution Drawback: Tailored for manufacturers who import raw materials or components, transform them into finished goods within the U.S., and subsequently export them. This type supports domestic production while enabling duty recovery.

These flexible options make the program applicable across a wide range of industries, from retail to manufacturing.

5. Section 301 Tariffs: Recover Duties on Chinese Imports

Since 2018, Section 301 tariffs on Chinese products—ranging from 7.5% to 25%—have significantly increased the cost of doing business for many U.S. importers.

The good news? These duties are fully recoverable under the drawback program if the goods are exported under the same HTS code. For companies hit hardest by these tariffs, the program provides a critical avenue for cost mitigation, restoring profitability in challenging market conditions.

6. Retroactive Recovery: Reach Back Five Years

One of the most powerful aspects of the duty drawback program is its retroactive applicability. Companies can recover duties, taxes, and fees on imports made within five years of filing a claim.

This extended timeline dramatically expands the pool of eligible imports, allowing businesses to unlock a treasure trove of past tariff payments. For companies new to the program, this feature alone can result in millions in recoveries right out of the gate.

7. Quick Analysis: Uncover Your Drawback Potential

A comprehensive analysis of your import and export data can quickly reveal the size of your recovery opportunity. This initial step doesn’t require a significant investment but provides valuable insights into how much your business could potentially save. Armed with this information, companies can make informed decisions about whether to pursue a drawback program—and where to focus their efforts.

8. Collaborate With Third Parties to Maximize Refunds

Duty drawback isn’t limited to goods your company imports and exports directly. Through third-party arrangements, businesses can claim drawback on goods they export that were originally imported by someone else (or vice versa).

Proper documentation from the original importer or exporter is key, but this collaboration enables businesses to tap into an even larger pool of eligible refunds. This flexibility makes the program accessible even to companies without extensive trade flows.

9. Accelerated Payments: Faster Refunds, Greater Cash Flow

CBP offers an Accelerated Payment program that allows approved claimants to receive refunds within just one month of filing. While these payments are provisional until final claim liquidation, the ability to improve cash flow quickly is a game-changer for businesses managing tight budgets or investing in growth initiatives.

The expedited timeline ensures companies can benefit from their refunds sooner rather than later.

10. The Challenge of Complexity: Expertise Makes All the Difference

While the benefits of duty drawback are undeniable, the process of filing claims can be complex, with strict record-keeping, detailed documentation requirements, and ever-changing regulations. Many companies struggle to navigate the nuanced rules and maximize their recovery potential without dedicated expertise.

This is where partnering with trusted professionals becomes essential. DOJÖ Consulting specializes in guiding companies through the intricacies of the duty drawback program. Our experts provide tailored support to streamline the process, ensure compliance, and unlock the full scope of your refunds.