Duty drawback
Duty drawback refunds up to 99% of the customs duties, taxes, and fees paid on imported merchandise that is subsequently exported or destroyed under customs supervision. The main US types are unused merchandise drawback, manufacturing drawback (imported inputs built into exported products), and substitution drawback, which allows refunds on interchangeable goods classified under the same tariff line. Claims are filed with CBP and require import, production, and export records.
Examples
Manufacturing drawback: A device maker pays $380,000 a year in duty on imported circuit boards and exports 60% of finished units. Its annual claim recovers 99% of the duty tied to exported production, roughly $225,000.
Unused merchandise: A distributor imports 5,000 sensors, paying $4.10 in duty on each, then re-exports 1,200 unsold units to a European affiliate. It claims back about $4,870, which is 99% of the $4,920 paid on those units.
Substitution: A fittings manufacturer imports couplings and also buys interchangeable domestic ones under the same tariff line. When it exports 100,000 units, it claims drawback against its import duty without proving which physical units left the country.
Definition
Drawback exists because duties protect the domestic market: when imported goods leave that market again, most of the duty can be reclaimed. In the US, claims can generally be filed up to five years after the import date, and refunds cover 99% of eligible duties, taxes, and fees.
Three types matter. Unused merchandise drawback covers goods re-exported essentially as they arrived. Manufacturing drawback covers imported inputs consumed in products that are then exported. Substitution drawback is the workhorse for manufacturers: it allows refunds when exports share the same tariff classification as the imports, even if the physical units differ, sparing you serial-by-serial tracing through the plant.
The catch is documentation. A defensible claim ties import entries, production records, and proof of export together, and most claimants file through specialist brokers who take a share of the recovery. If you know at order time that goods will be re-exported, a foreign trade zone avoids paying duty in the first place; drawback recovers it afterward. Either way, the recovered cash belongs in your total landed cost math.
For claim types, timelines, and filing mechanics, see our practical guide to recovering import duties. Direct-materials teams use platforms like LightSource to keep duty visible at the quote line level, which makes drawback-eligible flows easier to spot.
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