Drawback is a refund of up to 99% of customs duties, taxes, and fees paid on imported merchandise that is subsequently exported or destroyed under customs supervision. Authorized by 19 U.S.C. § 1313 and administered under 19 CFR Part 190, drawback is one of the oldest provisions of U.S. customs law — dating to the Tariff Act of 1789.
TFTEA modernization. The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA, Pub. L. 114-125) substantially modernized drawback law. The new rules became effective February 24, 2018 and dramatically expanded eligibility:
- Substitution drawback now allowed based on 8-digit HTS classification (rather than narrower "commercially interchangeable" standards)
- 5-year filing window from date of import to date of export or destruction (up from 3 years)
- All drawback claims must be filed electronically through ACE
- A separate "limited" drawback framework applies to claims based on pre-TFTEA exports
Drawback types.
- Unused merchandise drawback — imported goods exported in the same condition (or destroyed)
- Manufacturing drawback — imported goods used to manufacture a different exported article
- Substitution drawback — exported goods of the same 8-digit HTS as imported goods (no tracing required)
- Rejected merchandise drawback — defective or non-conforming imports
- NAFTA / USMCA drawback — limited "lesser of two duties" formula for goods shipped to Mexico or Canada
Filing requirements.
- Filed by the drawback claimant (usually the importer or exporter, or a designated third party)
- A drawback bond (surety) is typically required for accelerated payment
- Records must be retained for 3 years from the date of payment (5 years from the underlying entry)
Drawback recovers approximately $1-2 billion per year across all claimants — significant for high-volume importer-exporters but underused given its complexity.