How Tariffs Impact Duty Drawback

What Are Section 301, Section 232, and Section 122 Tariffs?

Section 301 tariffs were implemented to address certain trade practices and are commonly applied to goods imported from China. 301 tariffs are eligible for drawback

Section 232 tariffs were imposed on specific steel and aluminum products under national security provisions. Most if not ALL tariffs implemented under Section 232 are NOT eligable for drawback

Section 122 tariffs are temporary safeguard measures authorized under the Trade Act of 1974 to address balance-of-payments concerns. They can be implemented quickly and are generally limited in duration unless extended or modified through additional trade action. 122 tariffs are eligible for drawback

Each of these measures increases the total duty paid at importation.

Can Tariffs Be Recovered Through Duty Drawback?

In many cases, yes.

Eligible companies may recover up to 99 percent of:

• Section 301 tariffs

• Section 232 tariffs- NOT TRUE Section 232 is NOT eligible 

• Section 122 tariffs, when not restricted by statute or proclamation

• Most standard import duties

• Certain Merchandise Processing Fees

Recovery is possible when imported goods are later exported, destroyed under CBP supervision, or used in the manufacture of exported products.

Eligibility depends on the specific regulatory language governing the tariff measure and compliance with U.S. Customs and Border Protection requirements.

Why Tariffs Increase the Value of Drawback Programs

As tariff rates increase, the financial value of duty drawback increases proportionally.

For example, a 25 percent Section 301 tariff substantially raises duty exposure. If qualifying goods are later exported, the recoverable refund amount increases accordingly.

For high-volume importers, drawback can materially offset tariff exposure and improve cash flow.

Common Scenarios Where Tariffs and Drawback Intersect

Companies frequently recover tariff-related duties in situations such as:

• Re-exporting imported inventory

• Manufacturing finished goods for export using tariffed components

• Participating in domestic supplier drawback programs

• Destroying obsolete or unsellable imported goods under CBP supervision

Many organizations paying elevated tariffs do not realize those duties may be eligible for recovery.

What About Section 122 Tariffs Specifically?

Section 122 tariffs function as additional import duties during their effective period.

Yes, duties paid under the Section 122 import surcharge are drawback eligible. Importers and exporters can recover up to 99% of these eligible tariffs when the imported merchandise is subsequently exported or destroyed.

Because Section 122 measures are typically temporary, companies should evaluate eligibility promptly to preserve refund opportunities within the five-year filing window.

Documentation and Compliance Requirements

Tariff recovery through drawback requires:

• Proof of import and duty payment

• Accurate tariff classification

• Proof of export or qualifying destruction

• Manufacturing records, when applicable

• Proper substitution methodology, if used

Incomplete documentation can delay claims or increase audit risk.

The Five-Year Filing Window

Companies may use imports that date back five years from the date a drawback claim is filed 

This retroactive window allows companies that have paid tariffs in prior years to recover previously unclaimed refunds, provided documentation is available.

How J.M. Rodgers Helps Clients Navigate Tariff Exposure

J.M. Rodgers evaluates tariff exposure alongside export activity to determine drawback eligibility and recovery potential.

Our approach includes:

• Reviewing import classifications and tariff applicability

• Matching export activity to eligible imports

• Identifying substitution opportunities

• Structuring compliant filing methodologies

• Providing audit-ready documentation and support

Because tariff policies evolve, we continuously monitor regulatory updates and adjust strategies accordingly.

Strategic Considerations for Importers

Tariffs increase cost of goods sold, but drawback can convert a portion of that cost into recoverable cash.

Companies with significant tariff exposure should evaluate:

• Export ratios

• Manufacturing operations

• Supply chain structure

• Historical duty payments

A structured assessment can determine whether tariff-related refunds are being left unclaimed.

Next Steps

If your company is paying Section 301, Section 232, Section 122, or other import duties, J.M. Rodgers can conduct a confidential evaluation to determine whether you qualify to recover those duties through duty drawback.

Disclaimer

This information is general in nature and does not constitute legal advice. Eligibility and refund amounts depend on specific facts and compliance with CBP regulations.