Filing While Tariffs Are High
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Filing While Tariffs Are High
For import and export businesses, managing costs is critical to maintaining competitiveness in the global market. One often-overlooked opportunity to reduce expenses is filing for duty drawback—a program offered by U.S. Customs and Border Protection (CBP) that allows businesses to recover up to 99% of the duties, taxes, and fees paid on imported goods that are subsequently exported or destroyed. When tariffs are high, taking advantage of duty drawback becomes especially important and beneficial.
Duty drawback can significantly improve cash flow for companies engaged in international trade. High tariffs can drastically increase the landed cost of imported goods, especially when these items are only temporarily brought into the country for processing, repackaging, or assembly before being shipped overseas. Without filing for drawback, businesses end up absorbing these extra costs, which can erode profit margins or make pricing less competitive in foreign markets. By recovering a large portion of the duties paid, companies can reinvest the savings into operations, product development, or expansion efforts.
Another major benefit of duty drawback is that it enhances supply chain flexibility. Businesses can make more strategic decisions about sourcing and manufacturing without being constrained by the financial impact of tariffs. For instance, a company might import raw materials from countries with higher duty rates but still maintain profitability by exporting finished products and claiming drawback. This allows firms to optimize for quality and cost across different stages of the production cycle without being penalized for their global supply strategies.
Moreover, filing for duty drawback can level the playing field for U.S.-based businesses competing against foreign manufacturers who don’t face similar import costs. By reclaiming duties, American companies can offer more competitive prices in global markets, helping them expand their international presence.
Despite its advantages, many businesses either aren’t aware of the duty drawback program or assume it’s too complex to pursue. While the process does require detailed documentation and adherence to specific timelines, the potential returns are well worth the effort. With the right expertise or support from companies like Duty Calc, businesses can streamline the process and maximize their refunds.
In an era where tariffs are a constant variable, filing for duty drawback offers a powerful way for import/export businesses to protect their bottom line and stay competitive on a global scale.
