Duty drawback is one of the oldest and most valuable trade programs in American history, yet it remains one of the most underutilized. Administered by U.S. Customs and Border Protection (CBP), duty drawback allows importers and exporters to claim a refund of up to 99 percent of certain duties, taxes, and fees collected at the time of importation. The refund is granted upon the exportation or destruction of imported merchandise, or articles manufactured from imported merchandise.
The purpose is straightforward: encourage American manufacturing and exports by ensuring that duties paid on imported components don’t make U.S. exporters less competitive in global markets. If you import materials, use them in production, and export the finished goods, why should you bear the full duty burden twice?
A Brief History of Duty Drawback
Duty drawback is America’s second-oldest trade law, established by the Tariff Act of 1789—the second piece of legislation passed by the First Congress under the newly ratified Constitution. Originally, claims were limited to duties paid on merchandise exported within one year.
The program wasn’t actually utilized until the Excise Act of March 3, 1791 levied high taxes on imported spirits—leading directly to the 1794 “Whiskey Rebellion.” The first year of drawback claims totaled just $20,000 in 1796. Today, billions of dollars in refunds are claimed annually, though an estimated $5 billion in eligible refunds go unclaimed each year.
The Five-Year Window
One of the most important rules to understand: drawback claims can be filed up to five years from the date of the original import entry. This creates both opportunity and urgency. Many companies discover they have years of unclaimed refunds sitting on the table—but that window closes daily as older entries age out of eligibility.
If your company imports dutiable goods and exports any portion of those goods (or products made from them), you may have significant unclaimed refunds available right now.
Why 99 Percent?
The refund is 99 percent rather than 100 percent because CBP retains 1 percent to cover administrative costs of processing drawback claims. This small administrative fee is negligible compared to the substantial refunds available, especially given today’s elevated tariff rates.
What Qualifies for Drawback?
Subject to drawback: Ordinary customs duties, internal revenue/federal excise taxes, voluntary tenders, duties paid with prior disclosures, duties collected per 19 U.S.C. § 1592(d), Merchandise Processing Fee (MPF), Harbor Maintenance Fee (HMF), and Section 301 duties.
NOT subject to drawback: Antidumping duties, countervailing duties, Section 232 duties, and over-quota rates of duty on agricultural products (tariff-rate quotas).
The inclusion of Section 301 duties in eligible drawback makes this program particularly valuable given the substantial tariffs imposed on Chinese goods in recent years.
About TLR Drawback Services
TLR’s drawback team combines decades of specialized experience with modern technology to maximize duty recovery for our clients. From program evaluation through claim filing and payment, we handle the complexity so you can focus on your business. Contact us to explore your drawback opportunity.
