The Global Entry with Thomas Taggart — A bi-weekly column on navigating global trade, ecommerce, and compliance in a changing world

The end of the U.S. de minimis exemption for all countries on August 29 isn’t just a policy change — it’s a profitability shockwave. Every shipment, no matter how small, now needs a full customs entry and will incur applicable duties. For many ecommerce brands, that means higher landed costs, tighter margins, and a scramble to adapt before peak season.

Read also: The End of De Minimis: How Global Ecommerce Brands Can Adapt and Win in the New U.S. Trade Era

But there’s an underused tool in the tariff survival kit — one that can put real money back in your pocket without changing your supply chain, product design, or market strategy. It’s called Duty Drawback, and if you’ve ever imported goods into the U.S. and then exported them again, you may already be sitting on a refund opportunity worth six or seven figures.

Why Duty Drawback Belongs in the Conversation Now

In Passport’s 2025 Peak Season Playbook survey with Drive Research, 99% of ecommerce leaders said tariffs and trade shifts are already affecting their Q4 planning. That’s not surprising when you consider how stacked the costs have become:

• Section 301 tariffs on Chinese goods (7.5%–25%) 
• IEEPA emergency tariffs (20%) layered on China-origin goods 
• Reciprocal tariffs ranging from 10% to 41% on other origins, plus Merchandise Processing Fees and Harbor Maintenance Fees 

For brands used to shipping low-value orders under de minimis, those costs hit hard — especially if returns, re-exports, or multi-market fulfillment are part of the mix.

That’s where duty drawback comes in. The U.S. government has offered this refund mechanism since 1789, but most ecommerce companies have never heard of it, much less used it. In essence, drawback allows you to recover up to 99% of duties, tariffs, and certain fees paid on goods that are imported and later exported in the same condition.

Duty Drawback 101: How It Works

Think of drawback as a “second chance” on duties you’ve already paid. If you import goods into the U.S. and then export them — to a customer overseas, to an international warehouse, or even back to the manufacturer — you can claim a refund on almost all the duties and fees for those units.

For ecommerce brands, the most relevant categories are:

1. Unused Merchandise Drawback – Finished goods imported and later re-exported unchanged (e.g., apparel shipped from a U.S. warehouse to a customer in Canada). 
2. Rejected or Destroyed Merchandise Drawback – Goods that are defective, returned, or destroyed under customs supervision. 
3. Manufacturing Drawback – Less common for DTC brands, but applies if imported inputs are used to make a product in the U.S. that is then exported. 

Key rule:  “Unused Merchandise” must leave the U.S. in substantially the same condition they arrived. Repackaging for shipping is fine; altering the product is not.

The Opportunity in Real Numbers

Here’s a simple scenario:

• You import $500,000 worth of footwear from Vietnam into the U.S., paying 12% in duties plus a Merchandise Processing Fee and Harbor Maintenance Fee. 
• Over the year, 10% of that inventory ships to customers in Canada and the UK from your U.S. warehouse. 
• That 10% is eligible for drawback — nearly $6,000 in recoverable duties for just one product category, one year. Multiply that across multiple SKUs and multiple years (claims can be filed retroactively for up to five years), and the total refund can climb into the six or seven figures. 

Why Brands Miss It

Despite the potential, most brands don’t file drawback claims. Common misconceptions include:

• “We’re not big enough.” In reality, mid-market brands often see the biggest percentage boost to margins. 
• “It’s too complex.” While documentation and data matching are required, a licensed customs broker can manage the process. 
• “It takes too long.” Initial setup can take months, but once in place, refunds can be processed in as little as 3–6 weeks. 
• “We don’t export enough.” If you ship to Canada, Mexico, the UK, the EU, or Australia from U.S. inventory — even occasionally — you may qualify. 

The Process at a Glance

1. Eligibility Assessment – Review your U.S. import data and outbound international shipments to identify overlap. 
2. Privileges Application – File with U.S. Customs and Border Protection (CBP) to get authorized for drawback. 
3. Data Matching – Match import entries to corresponding export shipments at the SKU level. 
4. Claim Filing – Submit claims periodically (monthly or quarterly) with all required documentation. 
5. Audit Readiness – Maintain records for at least five years in case CBP reviews your claim. 

How Duty Drawback Fits a Post–De Minimis Strategy

Drawback works best when integrated into your broader U.S. fulfillment model. For brands shifting to in-country enablement — bulk importing into the U.S., fulfilling domestically, and shipping internationally from U.S. inventory — drawback is a natural fit. Those outbound international orders create an automatic stream of eligible exports.

It’s also powerful for:

• High-return categories like apparel and footwear, where international returns can be refunded under drawback rules. 
• Hybrid fulfillment models that blend cross-border DTC shipping with in-country inventory. 
• Seasonal or promotional exports, like sending U.S. stock to an overseas warehouse for a holiday push. 

Quick Self-Check: Is Drawback Worth Exploring?

If you can answer “yes” to any of these, it’s time to run the numbers:

• Do you ship from U.S. inventory to international customers? 
• Do you have returns from international orders fulfilled in the U.S.? 
• Do you transfer U.S. stock to warehouses overseas? 
• Have you been importing the same products into the U.S. for several years? 

Why Move Now

In our survey, 81% of ecommerce leaders said tariff costs are significant enough to impact pricing — and 7 in 8 are raising prices to cope. Duty drawback offers a way to protect your margins without passing the entire cost onto your customers. And because you can file retroactive claims for up to five years, waiting means leaving real money on the table.

The Bottom Line

Duty drawback isn’t a loophole — it’s a centuries-old program designed to keep U.S. trade competitive. In today’s post–de minimis, high-tariff environment, it’s one of the few levers that can immediately improve cash flow without disrupting your operations or your customer experience.

If you’re importing into the U.S. and exporting — even occasionally — you could be entitled to a substantial refund. The only wrong move is ignoring it.

Author Bio

Thomas Taggart is VP of Global Trade at Passport, a leading global ecommerce solutions provider helping brands like Ridge, HexClad, and Wildflower Cases scale globally with cross-border shipping, expert compliance support, and in-country enablement services. To learn more about Passport, visit passportglobal.com. The Global Entry with Thomas Taggart is a new bi-weekly column in Global Trade Magazine covering the strategies, regulations, and insights shaping the future of cross-border commerce.