Cost Management
Duty Drawback
By Herzel MishelFounder, AgentisLast reviewed
Definition
A customs mechanism that allows merchants to claim refunds on import duties paid for goods that are subsequently exported or re-exported, recovering up to 99% of duties paid.
Duty drawback is a provision in customs law (available in the United States under 19 U.S.C. § 1313 and in many other jurisdictions) that permits importers to recover duties, taxes, and fees paid on imported merchandise that is later exported. For ecommerce merchants with international sales, duty drawback represents a significant cost recovery opportunity that is frequently overlooked. If a merchant imports goods from Asia, pays 25% in tariffs, and then sells 15% of that inventory to customers in Canada or Europe, they can file drawback claims to recover up to 99% of the duties paid on the exported portion. The process requires meticulous documentation (matching import entries to export shipments) and typically involves a three-year filing window. Given the elevated tariff environment of 2025–2026, duty drawback has become an increasingly valuable lever for merchants to recapture margin on cross-border sales that would otherwise bear the full burden of import duties.
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The effect of import duties and trade tariffs on ecommerce product costs, particularly the de minimis threshold changes affecting cross-border commerce.
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The total cost of a product delivered to the customer, including COGS, freight, duties, tariffs, insurance, and handling fees.
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