Duty Drawback Services: Recover Up to 99% of Import Duties Paid

Duty drawback is a CBP program that refunds up to 99% of import duties, taxes, and fees paid on goods that are subsequently exported. The legal authority is 19 USC §1313. The operating regulations are 19 CFR Part 190, substantially updated by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). If your company imports goods and exports finished products, you are likely leaving recoverable tariff dollars unclaimed. The five-year filing window means duties paid as far back as 2021 may still be recoverable on exports made through 2026.

CBP administers drawback claims through the ACE Drawback module. All claims are filed electronically. The 1% retained by CBP (the 99% cap) is non-recoverable. Everything else is refundable if the claim is properly documented and filed within the statutory window.

Types of Duty Drawback

TFTEA simplified and expanded the drawback program. Four types of drawback are available under 19 USC §1313 and 19 CFR Part 190.

Manufacturing Drawback (§1313(a) and §1313(b))

An importer pays duties on raw materials or components. Those materials are used to manufacture a finished product. The finished product is exported. The importer recovers up to 99% of the duties paid on the imported inputs. This applies both to direct identification drawback (§1313(a), where the specific imported material is traced to the export) and to manufacturing substitution drawback (§1313(b), where commercially interchangeable domestic or imported materials are substituted). Manufacturing drawback is the highest-value drawback type for industrial importers and manufacturers.

Unused Merchandise Drawback (§1313(j))

Goods are imported, never used in manufacturing, and exported in their original condition. The importer recovers up to 99% of duties paid. Under TFTEA‘s post-2019 rules, substitution unused merchandise drawback allows commercially interchangeable goods to be substituted. The export does not have to be the exact same physical unit that was imported, only a commercially interchangeable equivalent. This dramatically expands the pool of eligible export transactions.

Rejected Merchandise Drawback (§1313(c))

Goods are imported and subsequently found to be defective, not conforming to specifications, or shipped without consent of the consignee. The importer exports or destroys the goods and recovers up to 99% of duties paid. CBP must witness the destruction or receive documentation of the export. This type applies to quality control failures and mis-shipped goods.

Substitution Drawback (Post-TFTEA)

TFTEA‘s most significant change was the expansion of substitution rights across all drawback types. Previously, substitution required the substitute merchandise to be of the same kind and quality as the imported merchandise. TFTEA replaced that standard with commercial interchangeability, a more flexible test. If a product is commercially interchangeable with the imported good (as determined by its HTS 8-digit classification, grade, quality, and other commercial standards), it can serve as the basis for a substitution drawback claim. This allows companies with complex supply chains to pool imports and exports across a 180-day matching window under TFTEA rules.

How Much Can You Recover (99% Rule)

The recovery is 99% of all import duties, including Section 301 duties, Section 232 duties, Harbor Maintenance Fees (where applicable), and the Merchandise Processing Fee. The 1% CBP retention is statutory and not waivable. On a company with $5 million in annual import duties and $2 million in qualifying exports, the annual drawback opportunity can exceed $1.8 million. The Captain duty drawback module calculates your drawback opportunity by matching import entries against export records automatically.

Filing Window and Timeline

Under TFTEA, the drawback claim must be filed within five years of the date of import of the merchandise on which drawback is claimed. The export must occur within five years of the import. The old three-year filing window was extended to five years by TFTEA. For claims based on TFTEA‘s substitution rules, the import and the export must each fall within the TFTEA effective period (February 24, 2016 onward). Claims are filed electronically through the ACE Drawback module. CBP has 365 days to liquidate the claim. Interest accrues on unpaid claims if CBP does not liquidate within the statutory period.

Which Duties Qualify for Drawback

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Section 301 Drawback Status

Section 301 duties are eligible for duty drawback. CBP confirmed this in multiple guidance documents. An importer who paid Section 301 duties on Chinese components used in manufactured goods that were subsequently exported can recover up to 99% of the Section 301 duties paid on those components. This is one of the most valuable drawback opportunities in the current tariff environment given the scale of Section 301 duty payments since 2018.

Section 232 Drawback Status

Section 232 duties are eligible for duty drawback. The same 99% recovery rule applies. Steel and aluminum importers who use covered materials in manufactured goods for export should audit their drawback eligibility immediately. The five-year window means Section 232 duties paid as far back as 2021 may still be recoverable on qualifying exports.

IEEPA Drawback Status

IEEPA duties imposed under the Reciprocal Tariff Act are NOT eligible for duty drawback. Executive Order 14257 (April 2025) and subsequent executive actions explicitly excluded IEEPA-based tariffs from the drawback program. This is a critical distinction. Before filing a drawback claim that includes IEEPA duty payments, verify the duty type at the entry level. Mixing eligible and ineligible duties in a single claim without segregation creates compliance risk. The IEEPA tariff refunds page covers the limited recovery pathways available for IEEPA duties outside of drawback.

AD/CVD Drawback Status

Antidumping and countervailing duties are NOT eligible for duty drawback under 19 USC §1313. This is a long-standing statutory exclusion, not a recent policy change. Importers paying AD/CVD duties on imported merchandise have no drawback recovery pathway for those specific duties, even if the goods are subsequently exported.

Documentation and Recordkeeping Requirements

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Drawback claims require documentation of both the import and the export transaction. For manufacturing drawback, the importer must also document how the imported material was used in production. Required records typically include: import entry summaries (CBP Form 7501), commercial invoices and packing lists for imports, export documentation (airway bills, ocean bills of lading, export declarations), production records showing material usage, and proof of export from the U.S. Records must be maintained for three years after the claim is liquidated. The CBP Drawback Compliance Handbook provides detailed guidance on documentation standards. The trade advisory services team reviews recordkeeping systems before the first claim is filed to prevent rejection.

Drawback as a Tariff Strategy Lever

Duty drawback integrates into the broader tariff strategy toolkit alongside the Foreign-Trade Zones and customs bonded warehouse strategy. The decision between FTZ, bonded warehouse, and drawback depends on your ratio of imports to exports, your manufacturing process, and your cash flow timing. For companies with significant re-export or export operations, drawback often produces the highest dollar return because it recovers duties already paid rather than deferring future obligations. The First Sale for Export program reduces the dutiable value at entry, which reduces the duty base from which drawback is calculated. Combining both programs can maximize total duty reduction.

Frequently Asked Questions

What is duty drawback?

Duty drawback is a CBP program under 19 USC §1313 that refunds up to 99% of import duties paid on goods that are subsequently exported. It applies to finished goods manufactured from imported inputs (manufacturing drawback) and to imported goods exported without use (unused merchandise drawback).

How much can I recover with duty drawback?

Up to 99% of eligible import duties paid. CBP retains 1% as a statutory fee. Harbor Maintenance Fees and Merchandise Processing Fees are also recoverable on qualifying claims.

How long do I have to file a drawback claim?

Five years from the date of import of the merchandise on which drawback is claimed. TFTEA extended the window from three years to five years. The export must also occur within five years of the import.

Are Section 301 duties eligible for drawback?

Yes. Section 301 duties are fully eligible for duty drawback. CBP has confirmed this in guidance. Importers who used Section 301-affected Chinese inputs in exported manufactured goods should audit their recovery opportunity immediately.

Are Section 232 duties eligible for drawback?

Yes. Section 232 duties on steel, aluminum, and copper are eligible for duty drawback under the standard 99% recovery framework. Steel and aluminum manufacturers who export finished goods should file drawback claims for duties paid on imported inputs.

What is substitution drawback?

Substitution drawback allows commercially interchangeable merchandise to substitute for the specific imported goods in a drawback claim. TFTEA expanded this by replacing the old same kind and quality standard with a commercial interchangeability test. This allows companies to match imports against exports across a 180-day window without direct physical tracing.

Do I need a customs broker to file drawback claims?

Not legally required, but practically necessary for complex claims. Drawback claims require detailed matching of import entries to export records and documentation of manufacturing usage. Errors in drawback claims can result in rejection, interest charges, or penalties. A licensed customs broker with ACE Drawback module experience handles the filing and CBP audit response.

If your company exports, it is likely leaving tariff dollars on the table. The Captain duty drawback module matches import entries against export records automatically and calculates your drawback opportunity in real time. The trade advisory services team builds the claim file, manages CBP correspondence, and targets the five-year window to recover the maximum amount on duties paid since 2021.

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Customs Bonded Warehouse: Defer Duties Up to 5 Years (19 CFR 19)

A customs bonded warehouse is a CBP-approved storage facility where imported goods can be held for up to five years without paying U.S. import duties. The legal authority is 19 USC §1555-1565. CBP regulations under 19 CFR Part 19 set the operating requirements. Duties are owed only when the importer withdraws goods for consumption into U.S. commerce. If goods are exported without entering the U.S. market, no duties are collected. In the current tariff environment, bonded warehouse status gives importers a practical tool to defer duty payments on Section 301, Section 232, and Reciprocal Tariff Act exposure while managing cash flow and monitoring rate changes.

Every bonded warehouse operates under a Continuous Customs Bond. The Importer of Record is responsible for duties from the moment goods are withdrawn for consumption. CBP supervises through periodic audits and requires the warehouse operator to maintain detailed inventory records under 19 CFR Part 144.

How Long Goods Can Stay in a Bonded Warehouse (5-Year Rule)

The five-year clock starts on the date of importation, not the date of bonded warehouse entry. If goods arrive at the port on January 1, they must be withdrawn or re-exported by December 31 five years later. Failure to withdraw or export before the deadline triggers a general order and potential abandonment or seizure by CBP. Track entry dates carefully, especially for slow-moving inventory. The warehouse and distribution team manages bonded inventory tracking as part of the compliance program.

The 11 Classes of Bonded Warehouses (19 CFR 19.1)

CBP regulations define 11 distinct bonded warehouse classes. Each class has specific permitted activities and product restrictions.

Which Class Fits Each Business Model

  • Class 1: Used for storing imports belonging to the public. General merchandise storage. Most common for third-party logistics providers.
  • Class 2: Private warehouse used exclusively by the importer who owns the goods. No public storage.
  • Class 3: Public bonded warehouse that also bottles, packs, or repacks merchandise for the importer’s account.
  • Class 4: Bonded warehouse for distilled spirits, wines, and beer. Regulated by both CBP and the Alcohol and Tobacco Tax and Trade Bureau.
  • Class 5: Manufacturing bonded warehouse. Goods can be manufactured under bond with duties deferred on inputs. Finished goods withdrawn for consumption pay duties on the finished product.
  • Class 6: Smelting and refining warehouse. For metal ores and scrap that are processed into primary metals.
  • Class 7: Duty-free stores. Located at international airports and border crossings. Goods sold to travelers departing the U.S.
  • Class 8: Bonded yards or sheds for heavy or bulky merchandise. Used for items that cannot be conveniently stored indoors.
  • Class 9: General order warehouse. Holds unclaimed, abandoned, or seized merchandise until disposition is determined by CBP.
  • Class 10: Bonded livestock facilities. For live animals in transit or pending customs clearance.
  • Class 11: Bonded carriers and freight forwarders. Covers transportation bonds for in-bond movements between ports.

For most importers using bonded warehouse status as a tariff strategy tool, Class 2 (private) or Class 1 (third-party logistics) are the relevant options. The customs brokerage services team advises on which class fits your product type and ownership structure.

Bonded Warehouse vs Foreign-Trade Zone

Both structures defer duties on imports and allow duty-free re-export. The differences determine which is right for a given operation.

Cost Comparison

A bonded warehouse requires a Continuous Customs Bond (typically 10% of estimated annual duties, minimum $50,000) and per-entry filing fees. Setup time is shorter than an FTZ. An FTZ requires an application to the FTZ Board (6-18 months), activation fees, and ongoing compliance software. For lower-volume operations, a bonded warehouse costs less to operate. For high-volume importers processing or manufacturing goods, the FTZ’s inverted tariff and weekly entry benefits often justify the higher setup cost.

Operational Complexity

Bonded warehouses have simpler recordkeeping requirements than FTZs. CBP does not require a specialized inventory control system, only accurate records of entries and withdrawals. FTZs require an FTZ Board-approved inventory control and recordkeeping system with real-time tracking. The Foreign-Trade Zones explained article covers the full FTZ operational framework.

Duty Treatment Differences

The most important operational difference: in a bonded warehouse, duties apply at the rate in effect at the time of withdrawal for consumption, not at the time of entry. If Section 301 rates drop, or if an exclusion is granted while goods sit in the warehouse, the importer pays the lower rate at withdrawal. This makes a bonded warehouse a useful tool for importers waiting on pending exclusion decisions or expecting rate reductions.

Withdrawal Process

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Withdrawing goods from a bonded warehouse follows distinct procedures depending on whether goods enter U.S. commerce or are exported. The forms and duty implications differ for each path.

Forms 7501 and 7512

Withdrawal for consumption uses CBP Form 7501 (Entry Summary). This is the standard import entry form. Duties, fees, and taxes are paid at this point. Withdrawal for exportation uses CBP Form 7512 (Transportation Entry and Manifest). No duties are collected on goods exported directly from a bonded warehouse.

Duty Calculation at Withdrawal Date vs Entry Date

The duty rate applied is the rate in effect on the withdrawal date, not the date goods originally entered the bonded warehouse. This creates both opportunity and risk. If rates increase after entry, the importer pays the higher withdrawal-date rate. If rates decrease (or exclusions are granted), the importer benefits from the lower rate. Monitoring rate changes with the tariff consulting firm team helps time withdrawals to minimize duty exposure.

Tariff Strategy Use Cases

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A bonded warehouse functions as a timing tool. The scenarios below show where it delivers the most value in the current tariff environment.

Section 301 Exposure Timing

An importer expecting a USTR exclusion decision on a specific HTS code can admit goods to a bonded warehouse and wait. If the exclusion is granted, the importer withdraws at zero Section 301 rate. If denied, the importer withdraws at the standard rate and pays duties. The five-year window gives significant flexibility for long-running exclusion review processes.

Slow-Moving Inventory Cash Flow

For products with long sales cycles (capital equipment, specialty chemicals, high-value components), bonded warehouse status defers a large duty payment until the sale is made. The importer does not pay duties on inventory that has not yet generated revenue. This aligns duty payment with cash receipts from customers. The trade advisory services team models the working capital impact versus the Continuous Bond cost before recommending bonded entry.

Compliance, Bond Requirements and CBP Audits

The Continuous Customs Bond must cover estimated duties, taxes, and fees for all goods in the warehouse at any given time. CBP can require an increase in bond coverage if inventory levels or duty rates increase significantly. CBP conducts periodic audits of bonded warehouse operations. Deficiencies in recordkeeping, unauthorized removals, or failure to pay duties on withdrawal can result in bond forfeiture and warehouse decertification. Maintain accurate entry-level records using warehouse management software for every lot admitted and every withdrawal made. Use the duty drawback services workflow to recover duties on bonded goods that are subsequently exported as part of manufactured finished goods.

Frequently Asked Questions

How long can goods stay in a bonded warehouse?

Five years from the date of importation. The five-year clock runs from the original import date, not the date goods entered the bonded warehouse. Goods not withdrawn or exported within five years are subject to general order and potential abandonment.

What is the difference between a bonded warehouse and an FTZ?

A bonded warehouse is storage-only and does not allow manufacturing or processing. An FTZ allows manufacturing, offers inverted tariff relief and weekly entry filing, and requires FTZ Board activation. Both defer duties and allow duty-free re-export. Bonded warehouses are faster and cheaper to set up; FTZs provide more operational benefits for manufacturers.

Do I pay tariffs on goods stored in a bonded warehouse?

No, not while goods remain in the warehouse. Duties are owed only when goods are withdrawn for consumption into U.S. commerce. The rate that applies is the rate in effect on the withdrawal date.

How much does a bonded warehouse cost?

Costs include the Continuous Customs Bond premium (typically 1-3% of the bond amount annually), warehouse storage fees, and customs broker fees for entry filing. The bond amount is typically 10% of estimated annual duties, with a minimum of $50,000. Third-party bonded warehouses charge storage fees similar to general warehousing rates.

What are the 11 classes of bonded warehouses?

The 11 classes under 19 CFR 19.1 cover: public storage (Class 1), private storage (Class 2), bottling/packing (Class 3), distilled spirits (Class 4), manufacturing (Class 5), smelting and refining (Class 6), duty-free stores (Class 7), bulk yards (Class 8), general order (Class 9), livestock (Class 10), and bonded carriers (Class 11).

Can I re-export from a bonded warehouse duty free?

Yes. Goods withdrawn from a bonded warehouse for exportation using CBP Form 7512 owe no U.S. import duties. This applies regardless of the Section 301, Section 232, or Reciprocal Tariff Act rates in effect at the time of export.

What happens if duties change while goods are in the bonded warehouse?

The rate in effect on the withdrawal date applies. If rates increase, you pay more when you withdraw. If rates decrease or an exclusion is granted, you pay less. This makes a bonded warehouse valuable when exclusion decisions or rate negotiations are pending.

A bonded warehouse buys up to five years of tariff timing flexibility on any shipment. The customs brokerage services team handles bonded entry filing and withdrawal management. The trade advisory services team models duty deferral savings against Continuous Bond costs and timing scenarios to determine whether bonded entry makes sense for your inventory profile.

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Foreign-Trade Zones (FTZ): Defer and Eliminate Import Duties

A Foreign-Trade Zone (FTZ) is a CBP-supervised area within the U.S. where imported goods can be stored, processed, or manufactured without entering U.S. customs territory. Duties are deferred until goods leave the zone and enter U.S. commerce. If goods are re-exported, no U.S. duties apply at all. The program was created by the Foreign-Trade Zones Act of 1934 (19 USC §81a-81u) and is one of the most powerful tariff strategy tools available to mid-market and large importers operating in the current high-tariff environment.

FTZ operations are governed by two regulatory frameworks: the Foreign-Trade Zones Board (Commerce Department) under 15 CFR Part 400 handles zone designation and oversight, while U.S. Customs and Border Protection (CBP) governs day-to-day zone operations under 19 CFR Part 146. Every admission of merchandise into an FTZ requires CBP Form 214 (Admission Application).

How an FTZ Works

Goods entering an FTZ are not subject to U.S. import duties at the time of admission. CBP monitors the zone through activation agreements and periodic audits. The importer or zone operator tracks merchandise inside the zone and files a CBP entry only when goods are withdrawn for consumption into the U.S. market. If goods are re-exported, the entry is never filed and no U.S. duty is ever owed.

General-Purpose Zones vs Subzones

General-purpose zones are public FTZ facilities, typically operated by port authorities or industrial park operators. Any company can apply to use space in a general-purpose zone without holding its own zone grant. Subzones are company-specific zones authorized for a single manufacturer or operator. A subzone allows a factory floor or warehouse to operate under FTZ status without being physically located in a general-purpose zone. Subzones require a separate application to the FTZ Board.

FTZ Board and Grantee Structure

The FTZ Board (chaired by the Secretary of Commerce) grants zone status to a grantee, which is typically a state or local government entity or a port authority. The grantee then sponsors operators who use the zone for their import and manufacturing operations. The grantee is responsible for overall zone compliance. The operator is responsible for day-to-day recordkeeping and CBP reporting. An importer can be both grantee and operator in a subzone structure.

FTZ Benefits for U.S. Importers

Duty Deferral (Cash Flow Impact)

Without an FTZ, duties are owed at the time of CBP entry filing, which happens when goods arrive at the port. With an FTZ, duties are owed only when goods are withdrawn for consumption. A company that turns inventory every 60 days defers duties by 60 days per cycle. On $10 million in annual tariff exposure at a 25% combined rate, deferring $2.5 million in duty payments by 60 days generates meaningful working capital savings. The tariff consulting firm team models the cash flow impact against FTZ setup and operating costs before recommending activation.

Duty Elimination on Re-Exports

Goods admitted to an FTZ and subsequently exported without entering U.S. commerce owe zero U.S. duties. This is absolute elimination, not deferral. For importers who also export (manufacturers, distributors supplying foreign customers), FTZ status converts duty-paid imports into duty-free inputs for re-export. Combine this with duty drawback services modeling to identify which path produces the higher recovery on re-exported goods.

Weekly Entry (Filing and MPF Savings)

Standard import practice requires a CBP entry filing per shipment. The Merchandise Processing Fee (MPF) is 0.3464% of the dutiable value, with a minimum of $32.71 and a maximum of $608.37 per entry. FTZ operators can consolidate all withdrawals for a seven-day period into one weekly entry. An importer receiving 20 shipments per week files 1 entry instead of 20, reducing MPF exposure by up to 95% on the fixed-cost portion. The customs brokerage services team handles weekly entry filing as part of the FTZ activation package.

Inverted Tariff Relief

An inverted tariff situation exists when the duty rate on a finished manufactured product is lower than the duty rate on one or more of its components. In an FTZ, a manufacturer can elect to pay duty on the finished product HTS rate rather than on the imported component rates. If steel components (Chapter 73, 25% Section 232) are used to manufacture a finished industrial product (Chapter 84, 0-2% Column 1 duty), the manufacturer pays duty at the finished product rate. The savings per unit can be substantial at current tariff levels.

FTZ vs Customs Bonded Warehouse

Both structures defer duties, but they serve different operational profiles:

  • FTZ: Allows manufacturing, processing, and assembly. Re-exports are duty-free. Weekly entry reduces MPF. Inverted tariff election available. Requires FTZ Board activation (6-18 months). Higher ongoing compliance cost.
  • Customs bonded warehouse: Storage only. No manufacturing. Re-exports are duty-free. Duties paid at withdrawal rate (rate in effect at withdrawal, not entry). Faster to set up. Lower ongoing cost. 5-year storage limit.

For importers that process or manufacture goods, FTZ status provides more levers. For importers that only store and resell, the customs bonded warehouse strategy or tariff engineering is simpler and faster to activate. The trade advisory services team runs a decision matrix based on your product mix, re-export volume, and manufacturing operations before recommending either structure.

How to Set Up FTZ Status

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Activating FTZ status requires a two-step approval process through the FTZ Board and CBP. Timeline and cost vary by zone type and structure.

Cost and Timeline

Activation requires an application to the FTZ Board, a CBP activation agreement, and appointment of a zone operator. The FTZ Board reviews applications and issues a grant of authority, which typically takes 6-18 months. Ongoing costs include CBP activation fees, operator compliance software, and customs broker support for weekly entry filing. Setup costs typically range from $50,000 to $150,000 for a subzone depending on complexity.

Compliance and Recordkeeping Requirements

FTZ operators must maintain an inventory control and recordkeeping system (ICRS) approved by CBP. All admissions, manipulations, and withdrawals must be documented. CBP conducts periodic audits. The Foreign-Trade Zones Act of 1934 (19 USC §81a-81u) sets the legal framework; 15 CFR Part 400 sets the Board’s procedural rules; 19 CFR Part 146 sets CBP’s operational requirements. Non-compliance can result in suspension of FTZ status.

Common Mistakes That Void FTZ Benefits

  • Admitting goods after the proclamation effective date: Duties for Section 301 or Reciprocal Tariff Act purposes are assessed at the rate in effect at the time of withdrawal, not admission. FTZ does not freeze the rate at admission. Only certain zone-specific elections can lock in pre-proclamation rates for specific circumstances.
  • Manufacturing without CBP approval: Manufacturing in an FTZ requires a manufacturing authority from the FTZ Board. Storage-only zones cannot perform manufacturing without separate approval.
  • Inadequate recordkeeping: CBP can decertify FTZ status for systemic recordkeeping failures. Every admission and withdrawal must be documented in the ICRS.
  • Misapplying the inverted tariff election: The election requires the finished product HTS code to have a lower rate than the component. Confirm the HTS classification of both before filing the election.

Frequently Asked Questions

What is a Foreign-Trade Zone?

A Foreign-Trade Zone is a CBP-supervised area within U.S. borders where imported goods can be stored, processed, or manufactured without triggering U.S. import duties. Duties are owed only when goods leave the zone and enter U.S. commerce. Re-exported goods owe no U.S. duties.

How much can importers save with an FTZ?

Savings vary by product and volume. Duty deferral improves working capital. MPF savings from weekly entry can exceed $300,000 annually for high-volume importers. First Sale for Export reduces the dutiable value before FTZ admission, compounding savings. Inverted tariff relief can reduce the effective duty rate by 15-25 percentage points on manufactured goods. Model the savings against setup costs before committing.

What is the difference between an FTZ and a bonded warehouse?

An FTZ allows manufacturing and processing; a bonded warehouse is storage-only. An FTZ offers inverted tariff election and weekly entry benefits; a bonded warehouse does not. FTZ setup takes 6-18 months; a bonded warehouse can be operational faster. Both defer duties and allow duty-free re-export.

How long does FTZ activation take?

6-18 months from application submission to FTZ Board grant and CBP activation. Subzone applications for a single manufacturer can sometimes be processed faster if the Board has expedited review procedures available.

Can FTZ goods be re-exported duty free?

Yes. Goods admitted to an FTZ and subsequently exported without entering U.S. commerce owe zero U.S. import duties. This applies regardless of Section 301, Section 232, or Reciprocal Tariff Act rates in effect at the time.

Does an FTZ help against Section 301 tariffs?

For re-exports, yes. Section 301 duties are eliminated on goods that leave the FTZ as exports. For domestic consumption, Section 301 duties still apply at withdrawal. The FTZ defers payment but does not eliminate duties on goods entering U.S. commerce.

What is inverted tariff relief in an FTZ?

Inverted tariff relief allows a manufacturer in an FTZ to pay duty on the finished product HTS rate rather than on the component rates when the finished product rate is lower. This applies when assembling finished goods from high-duty components into a lower-tariff final product category.

An FTZ is one of the highest-leverage tariff tools available to mid-market importers operating in the current environment. The tariff consulting firm team assesses whether your import profile justifies FTZ activation. The trade advisory services team models deferral savings, MPF reduction, and inverted tariff opportunities against your current duty exposure before the first application is filed.

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