The Duty Drawback Decision Tree

Duty drawback is a refund program that lets you recover up to 99% of duties paid on goods that were imported into the US and later exported or destroyed. The five-year lookback means you're not just looking at future savings - you're potentially sitting on a significant refund right now, on duties you've already paid.

The reason most brands have never touched it: traditional brokers have claim minimums of $500K and built their operations around large manufacturers, not ecommerce brands shipping out of a 3PL.

So the opportunity sits there unclaimed while operators raise prices and cut SKUs to manage tariff costs instead.

That's changed.

A new category of drawback platforms built specifically for ecommerce has dropped the minimum to ~$10K, and CBP confirmed in April 2025 that the new reciprocal tariffs are drawback eligible. If you're sourcing from Asia and fulfilling any international orders, the math is worth running.

This piece gives you a four-question filter to find out if you qualify, and the back-of-napkin math to estimate how much you're looking at.

I spoke with Parker Burr, founder of Evana, to put this together. 

Evana is a drawback platform built specifically for ecommerce brands, and Parker has processed claims across a wide range of Shopify and DTC operators. The framework and math in this article come directly from our conversation.

• You can connect with Parker directly here.

Table of Contents

1. What Drawback Actually Is

2. The Four-Question Filter

3. The Back-of-Napkin Math

4. What Disqualifies You

5. What to Do if the Math Works

1. What Drawback Actually Is

Duty drawback is a refund program administered by U.S. Customs and Border Protection. If you paid duties on goods coming into the US and those goods later left the country, through an international sale, a cross-border return, or destruction, you're entitled to get most of that money back. Up to 99% of duties paid, going back five years from the original import date.

The program has existed since 1789, but two things make it more relevant for ecommerce operators right now.

First, duty rates are higher than they've been in decades. Section 301 tariffs on Chinese goods have been in effect for years, and CBP confirmed in April 2025 that the new reciprocal tariffs are also drawback eligible. If you've been importing from China and fulfilling international orders out of US inventory, the refund potential is larger than it was a year ago.

Second, the infrastructure has modernized. For most of the program's history, drawback was reserved for large manufacturers with dedicated trade compliance teams and claim volumes large enough to justify the administrative burden. That's no longer the case.

The three types of drawback

It helps to understand which version applies to your business before running the math:

• Unused merchandise drawback: Goods came in, duties were paid, goods went out in the same condition. This is the most common scenario for ecommerce brands fulfilling international orders out of US warehouses.

• Manufacturing drawback: Imported materials are used to produce a finished good that's then exported. Less common for pure-play ecommerce, more relevant for brands with any domestic production.

• Destruction drawback: Goods are destroyed under customs supervision rather than exported. Relevant if you have regular volumes of expired, damaged, or obsolete inventory you're disposing of.

For most brands reading this, unused merchandise drawback is the primary opportunity. Destruction drawback is worth knowing about if you operate in categories with expiry dates, like supplements or cosmetics, because the paperwork has to be filed before disposal.

What stays consistent across all three: the goods have to leave the US, or be destroyed under proper customs supervision. Drawback is not a discount on your import costs. It's a refund on duties paid for product that was never consumed by a US customer. Everything else in this article flows from that.

2. The Four-Question Filter

Run through these in order. One "no" doesn't automatically disqualify you, but two or more usually does. The goal is to spend five minutes here before spending any time on the math.

Question 1: Annual duty spend above $10K?

Drawback is only worth pursuing if the duties you've paid are significant enough to justify the process. Parker thinks about this in terms of three variables:

• Where is your product coming from, and what's the duty rate?

• What are your COGS?

• What volume are you moving?

A low duty rate on high-volume, low-cost goods can still produce a meaningful claim. So can a high duty rate on low-volume, high-value goods. Jewelry is a good example of the latter. Supplements and apparel sourced from China or India, with current tariff rates, are good examples of the former.

The rough threshold Parker uses: if your annual duty spend is above $10,000, it's worth running the full estimate. Below that, the administrative effort may not justify it unless you're growing fast and want to set up the program for future years.

Question 2: Did goods enter the US under your company name?

This is the question most operators can't answer immediately, and it matters more than almost anything else in this process. If you're the importer of record (IOR), you're the entity that legally brought the goods into the US and paid the duties. That makes filing straightforward. If you're not, there are extra steps, and in some cases the claim becomes significantly more complicated.

The fastest way to check: go to importyeti.com and search your company name. If there's a history of shipments coming in under your company's name, you're likely the IOR. If nothing comes up, or if you see your 3PL or a factory name instead, you have some digging to do.

Parker flags this as one of the most common surprises: "Very new brands just don't know. Brands that have been around for 10, 15 years have had employee turnover. Three employees ago someone made some agreement. They don't know what actually happened."

Not being the IOR isn't a dead end, but it does add friction. Factor that in before going further.

Question 3: Do goods leave the US or get destroyed?

This is where most ecommerce brands have more eligibility than they realize. The qualifying events are broader than operators typically assume:

• International orders shipped from US warehouse inventory

• Cross-border returns from international customers

• Inventory transferred to overseas warehouses

• Damaged or defective goods destroyed under customs supervision

• Expired product disposed of before reaching a US consumer

Those last two are worth pausing on. If your brand operates in a category with expiration dates, like supplements, cosmetics, or food, you may have a destruction drawback opportunity every time you dispose of aging inventory. The catch is that the paperwork has to be filed before you throw anything out. Once it's gone, that eligibility is gone too.

A useful benchmark: Parker sees roughly 10% of revenue going to international customers for a typical Shopify brand. If you're above that, your export-based eligibility is likely higher than average.

Question 4: Are your imports fully above board?

Drawback requires a clean import history. If your goods have been coming in with accurate classification, correct declared values, and proper documentation, you're in good shape. If there are compliance issues on the import side, drawback won't help and could create additional exposure.

Parker is direct about this: "If you're doing sketchy things on the way in, there's nothing we can do."

The specific things that disqualify you:

• Goods declared at understated values at the border

• Misclassified HTS codes, whether intentional or not

• Trans-shipping arrangements where country of origin has been obscured

• Supplier-as-IOR setups where the declared value is being managed by someone else

If any of those apply, the right conversation is with a trade compliance attorney, not a drawback provider.

Where you stand after the filter

If you got through all four questions with mostly yes answers, the next step is running the math. If you got stuck on Question 2 or 4, you have some groundwork to do first. Either way, you now know which problem you're actually solving.

3. The Back-of-Napkin Math

If you passed the filter, the next step is getting a rough number. Not a precise claim amount, that requires connecting your actual import data, but enough to know whether this is a $20,000 conversation or a $200,000 one. Those are very different decisions, and the math to get there takes about ten minutes.

Parker walks every new brand through the same calculation. Here's the formula:

Total annual revenue x % of sales to international customers = international revenue International revenue x COGS % = COGS on exported goods COGS on exported goods x duty rate = annual eligible duties Annual eligible duties x 5 = rough claim estimate

The five-year multiplier is the part that surprises most operators. Drawback eligibility goes back five years from the date of importation, which means you're not just estimating what you can recover going forward. You're potentially sitting on several years of unclaimed refunds right now. The longer you've been importing and selling internationally, the larger that number gets.

A worked example

Parker runs through this with a $10M brand:

• $10M in annual revenue

• 10% goes to international customers = $1M in international sales

• COGS on that $1M is roughly $200K

• Duty rate is 10%

• That's $20K in eligible duties per year

• Times five years: $100K claim

A $100K claim on a $10M brand is meaningful. And that example uses a 10% duty rate, which is conservative given current tariff rates on Chinese goods. If you're sourcing from China at current reciprocal tariff levels, your effective rate could be significantly higher, and the same math produces a proportionally larger number.

It's also worth noting that the 10% international revenue figure is Parker's baseline for a typical Shopify brand. If you're actively selling into Canada, the EU, the UK, or Australia, your percentage may be higher. Run the math with your actual number, not the benchmark.

What moves the number up

• Higher duty rate. If you're sourcing from China, your effective rate on many product categories is well above 10% when you factor in Section 301 tariffs and the new reciprocal tariffs. The same formula on a 25% or 30% rate produces a claim two to three times larger than the example above.

• Higher international volume. The more of your revenue going to customers outside the US, the larger your pool of eligible exports. Brands with active international storefronts or distribution into key markets will see this number move quickly.

• Higher value goods. Brands with high COGS relative to revenue have more duty exposure per unit. Jewelry is the clearest example Parker points to, but premium apparel, electronics, and skincare all follow the same logic.

What drags it down

• Low duty rate. If your goods are coming in at 2% to 3%, you need very high volume or very high COGS to produce a claim worth the administrative effort. The math still works, it just takes longer to add up.

• Minimal international sales. If you're almost entirely domestic, your unused merchandise drawback opportunity is limited. Destruction drawback may still apply if you're regularly disposing of expired or damaged inventory, but the claim will be smaller.

• Short import history. The five-year lookback only helps you if you've been importing for five years. Newer brands are working with a shorter window, which compresses the total claim size even if the annual eligible duties are meaningful.

Don't forget destruction

Most operators focus entirely on international sales when they think about drawback. But if your brand sells in categories with expiration dates, supplements, cosmetics, food, the destruction side of the ledger can add meaningfully to your total claim. Every time you dispose of expired or damaged inventory without filing the right paperwork first, you're leaving that refund on the table permanently. Parker's rule: before you throw anything out, make a call.

Run it yourself

Evana has an estimator at evana.app/estimate that lets you plug in your own numbers. It won't give you a verified claim amount, but it will get you to an order of magnitude quickly. The estimate gets more precise when you factor in which specific products were exported, which import entries they're matched to, and what your actual duty rates were across different SKUs and shipments. That's the reconciliation work a platform or broker handles. The back-of-napkin math is a starting point, not a filing.