This article explains what duty drawback is, who it applies to, and what needs to be in place for a shipment to qualify.
Duty drawback lets eligible merchants recover US import duty on goods that are returned from the United States. It isn't available for every merchant or every shipment. It depends on Swap managing both the shipment into the US and the return back out.
What is duty drawback?
When you ship goods into the US, import duty is paid when the goods enter the country. If a customer returns those goods and they leave the US again, that duty can typically be recovered through duty drawback.
Without it, duty paid on a returned item is usually a permanent cost to your business.
How it differs from Returned Goods Relief
If you are a UK/EU business, you may be familiar with Returned Goods Relief. Both programs reduce the duty cost of returns, but they work at different points:
Duty drawback | Returned Goods Relief (RGR)* | |
What it does | Refunds duty that was already paid | Relieves you of paying duty in the first place |
When it applies | After goods have been imported and then exported again | When returned goods re-enter the country they originally came from |
Example | A UK brand's order is delivered to the US with duty paid, then returned to the UK. The US import duty can be recovered via duty drawback. | A returned item re-enters the UK without UK import duty being charged again. |
*Or equivalent program for your country or region, as defined by the WCO
How to claim duty drawback with Swap
Duty drawback applies when all of the following are true:
- You ship goods into the US.
- Goods are returned from the US back to your origin location.
- Swap manages the full shipment lifecycle:
- The import into the US, with Swap handling duties on a DDP basis.
- The return shipment out of the US, with Swap acting as Exporter of Record.
- Shipments move on Swap carrier accounts.
- The required documentation is available (see below).
If Swap doesn't manage both directions of the shipment, duty drawback doesn't apply.
What isn't covered?
The following aren't included in duty drawback:
- Shipments sent or returned on your own carrier accounts
- Merchants who use Swap for returns only, and not for outbound shipping into the US
- Merchants based in the US
- Shipments that were split across different providers or where Swap can't see the full journey
- Historic shipments
- Unused merchandise drawback, where a US-based business imports goods and then exports them
- Claims for IEEPA tariff refunds
Documentation
To support a claim, the following are needed for each eligible shipment:
- Commercial invoice
- Shipping and return labels
- Proof of delivery
- 7501 summary
Getting started
If you're not sure whether your shipping setup qualifies, check your current setup against the eligibility list above and reach out to your Swap contact to confirm your eligibility.