What Is Duty Drawback and How Does It Work?

I build trade compliance software, and drawback is the program where an import record and an export record have to agree line by line. The rules are not hidden. They sit in 19 U.S.C. 1313 ^[1] and 19 CFR Part 190 ^[2]. What stops most claims is the record: proving which import paid the duty on which export. This guide covers what drawback is, how it works, the procedure for claiming it, and where the 2025 and 2026 tariff changes moved the lines.

What is duty drawback?

Duty drawback is the refund of duties, taxes and fees that CBP collected on imported merchandise, paid back when that merchandise, or an article made from it, leaves the United States or is destroyed under CBP supervision. The statute sets the refund at 99 percent for the main claim types. For unused merchandise, the law says the regulations "shall provide for a refund of equal to 99 percent of the duties, taxes, and fees paid on the imported merchandise" ^[1].

Three ideas carry the whole program:

• The duty must have been paid. Drawback refunds money already collected at entry; it does not defer or waive anything. That is the difference from a foreign-trade zone or a bonded warehouse, which defer duty instead of refunding it.
• The goods must leave or be destroyed. Export, or destruction under CBP supervision, triggers the refund. Goods sold and used in the United States never qualify.
• The record must connect the two. Every claim links an export or destruction to the import entry line it draws on, either by tracing the same goods (direct identification) or by matching goods the law treats as interchangeable (substitution).

The right to claim belongs to the exporter or the destroyer. The exporter can waive it to the importer, the manufacturer or another party in the chain with a certification filed with each claim (19 CFR 190.28, 190.33 and 190.82) ^[2]. Since the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), records kept in the normal course of business can evidence each transfer of the goods, and "no additional certificates of transfer or manufacture shall be required" (19 U.S.C. 1313(b)(2)(C); (j)(2) says the same for transfers) ^[1]; the transfer records also assign the drawback right to the next party (19 CFR 190.10) ^[2]. Exporters who want the eligibility detail for their side of the chain can read duty drawback for exporters.

How does duty drawback work?

Duty drawback works in five steps: duty is paid at import, the goods (or articles made from them) are exported or destroyed within five years, each export is matched to the import entry line that paid duty, a complete claim is filed in ACE within five years of the import date, and CBP reviews and liquidates the claim and pays the refund.

1. Import and pay dutyThe entry summary line records the duty, taxes and fees paid
2. Export or destroy within 5 yearsUnchanged, or built into an article in the U.S.
3. Match export to importDirect identification or substitution, by entry line
4. File a complete claim in ACEWithin 5 years of the import date
5. CBP reviews and liquidatesRefund at liquidation, or earlier with accelerated payment

The matching step is where claims are won or lost. CBP refunds against the duty reported on a specific import entry summary line, usually as an average per unit, and the statute lets CBP require exactly that basis ^[1]. A claimant who cannot show which entry line an exported unit draws on has no claim on that unit, however clearly the export happened.

Two privileges change the pace. Waiver of prior notice lets an unused or rejected merchandise claimant export or destroy goods without first filing the notice that gives CBP the chance to examine them. Accelerated payment lets CBP pay the claim before liquidation, against a bond that covers the refund if CBP later finds the claim wrong (19 CFR 190.91 and 190.92) ^[2]. Without accelerated payment, the money arrives after CBP liquidates the claim. A drawback claim that CBP has not liquidated within one year of filing is generally deemed liquidated at the amount claimed, unless CBP extends it or the import entries behind it are still open, and CBP pays within 90 days after liquidation (19 U.S.C. 1504(a)(2) and (a)(3)) ^[3]. CBP's drawback FAQ adds that "all import entries must be liquidated, past the 180-day protest period" before a drawback refund is paid ^[6], though 19 CFR 190.81 allows an exception when the claimant files a written request ^[2]. The money itself arrives electronically: CBP has issued refunds that way since February 6, 2026, unless a paper-check waiver applies ^[18].

What are the types of duty drawback?

There are three main families of duty drawback in 19 U.S.C. 1313: manufacturing drawback, unused merchandise drawback and rejected merchandise drawback, and each comes in a direct identification form and, where the law allows, a substitution form ^[1].

Bottom line: For a manufacturer that builds imported components into exported assemblies, manufacturing drawback is the main route, and the ruling comes first. Service and spare parts it exports unchanged sit in unused merchandise drawback, and warranty returns of defective imports sit in rejected merchandise.

Manufacturing drawback needs a ruling in place by the first claim. A manufacturer whose process fits one of the general manufacturing drawback rulings in Appendix A to Part 190 files a letter of notification that it will operate under that ruling, with or before its first claim; any variation needs a specific manufacturing ruling (19 CFR 190.7 and 190.8) ^[2]. Section 301 and Section 232 manufacturing claims have their own wrinkles, covered in manufacturing drawback for Section 301 and Section 232. Unused goods sold by e-commerce sellers and handled by 3PLs are covered in unused merchandise drawback for e-commerce and 3PLs.

Accounting methods are how a direct identification claimant names which imported units left in an export when identical units sit in one inventory. 19 CFR 190.14 approves first-in first-out, last-in first-out, low-to-high and average methods, and the claim must state which one it used ^[5]. They apply only where the law does not allow substitution; where it does, the claimant substitutes instead.

Which duties can you get back through drawback in 2026?

Regular duties, Section 301 duties, Section 201 safeguard duties and the Merchandise Processing and Harbor Maintenance Fees qualify for drawback; antidumping and countervailing duties never do, Section 232 duties qualify only where the proclamation behind them allows it, and the IEEPA duties of 2025 and early 2026 come back through CBP's CAPE refund process instead.

Bottom line: For an importer of Chinese-origin components that exports, the MFN and Section 301 lines are what drawback returns, the IEEPA lines belong in CAPE, AD/CVD lines stay paid, and a Section 232 line comes back only where its proclamation allows drawback.

Two rows moved this year. On August 12, 2026 an ACE update began rejecting drawback on the forced-labor Section 301 lines, and on August 18 CBP corrected it, stating that "9903.05.20-9903.05.84 associated with Section 301 Forced Labor Import Duties are drawback eligible" ^[8]. And the IEEPA duties left drawback behind: the Canada, Mexico and China fentanyl orders had barred it from the start (EO 14193, sec. 2(g)), the reciprocal duties had allowed it (CSMS #64649265), and since the Supreme Court ruling CBP tells importers: "You are encouraged to place entry summaries that are eligible for drawback on your CAPE Declaration and submit them prior to filing a drawback claim" ^[17]. Our duty drawback eligibility guide lists the CBP messages and orders behind the Section 301, Section 122 and IEEPA rows. Section 301 recovery for China-origin goods is worked through in Section 301 China tariff drawback recovery, and the IEEPA refund route in our IEEPA tariff refund guide.

What is the procedure for claiming duty drawback?

The procedure for claiming duty drawback is to confirm the drawback type, set up the ruling or notices it needs, keep the import, export and inventory records that link each export to an entry line, and file a complete claim electronically in ACE within five years of the import date.

1. Map your flows to a drawback type. List what you import, what you export or destroy, and whether the goods change in between. Manufacturing, unused and rejected merchandise each have their own rules (table above).
2. Get the ruling or set up the notices. Manufacturing claims need a general or specific manufacturing drawback ruling in place by the first claim. Unused and rejected merchandise claims need a Notice of Intent to Export or Destroy filed at least five working days before the goods are exported, or seven working days before a destruction, unless CBP has waived prior notice (19 CFR 190.35, 190.42 and 190.71) ^[2].
3. Decide on privileges. Apply for waiver of prior notice and accelerated payment if you will claim regularly; accelerated payment needs a bond (19 CFR 190.91 and 190.92) ^[2].
4. Collect the records. Entry summaries with the duty paid per line, proof of export (19 CFR 190.72 accepts carrier records such as bills of lading and air waybills, and records from a CBP-approved electronic export system), the export's Schedule B number and value from the Electronic Export Information (19 CFR 190.11 and 190.51), inventory and production records, bills of materials for manufacturing, and any waiver of the right to claim.
5. Match exports to entry lines. By direct identification, by an approved accounting method, or by substitution at the 8-digit or 10-digit HTS level the law requires.
6. File the complete claim in ACE. Drawback claims are filed electronically; a claim is complete only when every required element is in (19 CFR 190.51) ^[2]. The TFTEA modernized drawback final rule moved claims to ACE, and claims under the old law closed on February 23, 2019 ^[19].
7. Answer CBP and keep the file. CBP may ask for records before it liquidates. Keep the claim records for three years after liquidation (19 CFR 190.15) ^[2].

Two time limits run the calendar. A complete claim must be filed within five years after the date of importation (19 U.S.C. 1313(r)(1)), and the goods must be exported or destroyed within the same five years ^[1]. Because the clock runs from the import date, a company starting its first claim loses the oldest month of eligible entries for every month it waits. Our free protest deadline calculator shows the drawback date for an entry alongside its liquidation and Post-Summary Correction dates, and the protest date once you enter a liquidation date.

How is the duty drawback amount calculated?

The duty drawback amount is 99 percent of the duties, taxes and fees paid on the imported merchandise that was exported or went into exported articles, usually computed from the average per-unit duty on the entry summary line, and capped further for substitution claims and for exports to Mexico and Canada.

Take a worked example with assumed rates: a manufacturer imports 10,000 gear assemblies valued at $1,000,000 and pays a 2.5% MFN duty plus a 25% Section 301 duty, $275,000 in all (fees left out to keep it simple). It builds 4,000 of them into pumps it exports to Germany under a manufacturing drawback ruling. The duty on those 4,000 units is $110,000, and 99 percent of it, $108,900, is the drawback.

$0$100K$200K$300K

$275K

−$165K

−$1.1K

$108.9K

Duty paid at importUnits sold in the U.S. (6,000)1% CBP keepsDrawback on the exports

Source: Assumed 2.5% MFN rate; 25% Section 301 rate; 99% refund under 19 U.S.C. 1313(l)

See the data

Step	Amount
Duty paid at import	$275K
Units sold in the U.S. (6,000)	−$165K
1% CBP keeps	−$1.1K
Drawback on the exports	$108.9K

Three things move the number away from that clean case:

• Substitution caps. When the claim substitutes, the refund is 99 percent of the lesser of the duty paid on the import and the duty the exported or substituted goods would owe if they were imported ^[1]. In CBP's guidance on Section 301 and 201 duties, the cap works on value: "the amount will be limited by the value of the substituted merchandise when it is lower than the value of the imported merchandise" ^[6]. The lesser of two rule works the arithmetic line by line.
• USMCA exports. For most drawback on goods exported to Mexico or Canada, the refund is capped at the lesser of the U.S. duty paid and the duty paid to Mexico or Canada on the exported good, with exemptions such as goods exported in the same condition and goods that did not conform to sample or specification (19 CFR 182.44 and 182.45) ^[20]. Unused merchandise substitution does not work at all on exports to Mexico or Canada, apart from a few listed goods (19 U.S.C. 1313(j)(4)) ^[1].
• Duty layers that don't qualify. AD/CVD duty stays paid, and so does Section 232 duty unless its proclamation allows drawback (table above).

How close real programs come to the 99 percent ceiling is covered in duty drawback recovery percentage. The ceiling is the statute's, never a promise of what a claim returns.

Why does substitution drawback depend on HTS classification?

Substitution drawback depends on HTS classification because the statute defines what may be substituted by HTS number: the same 8-digit subheading for manufacturing inputs and for unused merchandise, and, for unused merchandise whose 8-digit description begins with "Other", the same 10-digit statistical number, whose own description must not begin with "Other" either (19 U.S.C. 1313(b) and (j)(5)) ^[1].

That last rule is wider than it sounds. We counted the 2026 HTS (Revision 21, current from October 9, 2026) ^[21]:

Ch. 85 electrical36.9%

Ch. 84 machinery34.7%

Ch. 39 plastics33.5%

Ch. 90 instruments33.4%

All chapters 1-9731%

Ch. 87 vehicles and parts29.7%

Ch. 73 iron and steel articles29.2%

Source: GingerControl count of the USITC 2026 HTS, Revision 21, October 2026

See the data

HTS chapter	Share beginning with 'Other'
Ch. 85 electrical	36.9%
Ch. 84 machinery	34.7%
Ch. 39 plastics	33.5%
Ch. 90 instruments	33.4%
All chapters 1-97	31%
Ch. 87 vehicles and parts	29.7%
Ch. 73 iron and steel articles	29.2%

Quotable insight: Unused merchandise substitution is decided by the HTS before any refund is computed. In the 2026 HTS, 3,542 of the 11,414 eight-digit subheadings in Chapters 1 to 97 begin with "Other", so the match moves to 10 digits. For at least 2,176 of them, every 10-digit line begins with "Other" too, and substitution under 1313(j)(2) is closed: only direct identification is left.

Two practical consequences follow. First, an inconsistent HTS history breaks substitution even when the goods are identical: if two brokers put the same part in different subheadings across entries, the import and the export no longer match on paper. Second, a "basket" line that reads "Other" at both the 8-digit and 10-digit level forces a claimant back to tracing the actual goods, by part, lot or an accounting method. The statute does give exporters one help: for unused merchandise, the first eight digits of the Schedule B number may be used to check the 8-digit match (19 U.S.C. 1313(j)(6)) ^[1].

Getting classification consistent across entries is where we work. GingerControl's Classification Researcher asks clarifying questions before it suggests a 10-digit HTS code and writes a report with the reasoning behind it, so each part's code goes on record with its reason. GingerControl's Classification Researcher follows the reasoning a licensed customs broker uses: GRI analysis, Section and Chapter Note review, and CROSS ruling research. Its classifications are for general reference, educational, and planning purposes; before a code goes on an entry, your licensed customs broker reviews it. GingerControl is not a customs broker, does not file entries, and does not give legal advice.

Where drawback fits in a manufacturer's export records

For a manufacturer, drawback is won or lost in records kept long before a claim: entry summaries by line, exports linked to the imports they draw on, and one HTS code per part. GingerControl identifies and documents the opportunity; your licensed broker or counsel files. Our duty drawback service matches each export to the import entry that paid duty, builds the claim file and tracks every claim, and a drawback filing partner submits each claim in ACE. For a group that wants this inside its own systems, a custom GingerOS build can model drawback on the company's own entries, bills of materials and exports. How drawback sits next to FTZs and first sale in one program is covered in the manufacturer's duty-optimization program.

References

1. U.S. Code, 19 U.S.C. 1313, Drawback and refunds (2024 edition)
   Data cited: drawback types (a), (b), (c), (j)(1), (j)(2); transfers evidenced by business records (b)(2)(C), (j)(2); USMCA exports (j)(4); the "Other" rule (j)(5); Schedule B (j)(6); 99 percent refund and the lesser-of rule for substitution (l)(2); five-year filing limit (r)(1)
   Source: 19 U.S.C. 1313 on govinfo
2. eCFR, 19 CFR Part 190, Modernized Drawback
   Data cited: manufacturing rulings (190.7, 190.8); transfers and the right to claim (190.10, 190.28, 190.33, 190.82); proof of export and export data (190.11, 190.51, 190.72); recordkeeping (190.15); notices of intent to export or destroy (190.35, 190.42, 190.71); complete claim in ACE (190.51); waiver of prior notice and accelerated payment (190.91, 190.92)
   Source: 19 CFR Part 190
   Read: October 28, 2026
3. U.S. Code, 19 U.S.C. 1504, Limitation on liquidation
   Data cited: drawback claims deemed liquidated one year after filing unless extended (a)(2); payment within 90 days after liquidation (a)(3)
   Source: 19 U.S.C. 1504 on govinfo
4. eCFR, 19 CFR 190.3, Duties and fees subject or not subject to drawback
   Data cited: MPF and HMF subject to drawback; antidumping and countervailing duties not subject to drawback
   Source: 19 CFR 190.3
5. eCFR, 19 CFR 190.14, Identification of merchandise or articles by accounting method
   Data cited: approved accounting methods; not applicable where substitution is allowed
   Source: 19 CFR 190.14
6. CBP, Drawback Trade Remedies Frequently Asked Questions
   Data cited: Section 301 and Section 201 duties eligible; the value-based lesser-of limit on substitution claims; import entries liquidated and final before a drawback refund
   Source: CBP Drawback Trade Remedies FAQ
7. CBP, CSMS #18-000419
   Data cited: "Section 301 duties are eligible for duty drawback."
   Source: CSMS #18-000419
   Published: July 3, 2018
8. CBP, CSMS #69567203
   Data cited: forced-labor Section 301 duties (9903.05.20 to 9903.05.84) drawback eligible after the August 12, 2026 ACE change
   Source: CSMS #69567203
   Published: August 18, 2026
9. Federal Register, 91 FR 47318, Notice of actions in Section 301 investigations of various economies
   Data cited: forced-labor Section 301 duties on goods entered on or after July 24, 2026
   Source: 91 FR 47318
   Published: July 28, 2026
10. Federal Register, Proclamation 11021, steel, aluminum and copper
    Data cited: clause 13, manufacturing drawback on goods meeting four conditions; clause 14, no other drawback; effective April 6, 2026
    Source: Proclamation 11021
    Published: April 9, 2026
11. Federal Register, Proclamation 10984, medium- and heavy-duty vehicles, parts and buses
    Data cited: clause 15, only manufacturing drawback on truck parts and on automobile parts under Proclamation 10908, from November 1, 2025
    Source: Proclamation 10984
    Published: October 22, 2025
12. Federal Register, Proclamation 10976, timber, lumber and derivative products
    Data cited: clause 14, "Drawback shall be available with respect to the duties imposed pursuant to this proclamation."
    Source: Proclamation 10976
    Published: October 6, 2025
13. Federal Register, Proclamation 11020, pharmaceuticals and pharmaceutical ingredients
    Data cited: clause 10, drawback available on the Section 232 pharmaceutical duties
    Source: Proclamation 11020
    Published: April 9, 2026
14. CBP, CSMS #67844987
    Data cited: drawback available on the Section 122 surcharge, February 24 to July 24, 2026
    Source: CSMS #67844987
15. Supreme Court of the United States, Learning Resources, Inc. v. Trump, No. 24-1287
    Data cited: decided February 20, 2026
    Source: Learning Resources, Inc. v. Trump
16. CBP, CSMS #67834313
    Data cited: IEEPA duties no longer collected on goods entered on or after February 24, 2026
    Source: CSMS #67834313
17. CBP, IEEPA Duty Refunds
    Data cited: CAPE Phase 1 scope (certain unliquidated entries and certain entries within 80 days of liquidation); CAPE Declaration before a drawback claim
    Source: CBP IEEPA Duty Refunds
    Read: October 28, 2026
18. Federal Register, Electronic Refunds (CBP Dec. 25-18)
    Data cited: refunds issued electronically from February 6, 2026, unless a waiver applies
    Source: Electronic Refunds, 2025-24171
    Published: January 2, 2026
19. Federal Register, Modernized Drawback final rule
    Data cited: ACE filing; claims under the pre-TFTEA law (19 CFR Part 191) closed after February 23, 2019
    Source: Modernized Drawback, 83 FR 64942
    Published: December 18, 2018
20. eCFR, 19 CFR Part 182, Subpart E, USMCA drawback
    Data cited: the lesser-of limit on drawback for goods exported to Mexico or Canada (182.44) and its exemptions (182.45)
    Source: 19 CFR Part 182
21. USITC, Harmonized Tariff Schedule of the United States, 2026 Revision 21
    Data cited: 11,414 eight-digit subheadings in Chapters 1 to 97; 3,542 begin with "Other"; at least 2,176 of those have every 10-digit line beginning with "Other"; chapter shares. GingerControl count of the USITC export, October 27, 2026; a subheading with a single statistical suffix is counted from its only 10-digit line
    Source: USITC HTS