UPDATE: On February 20, 2026, the Supreme Court ruled 6-3 that the IEEPA does not authorize the President to impose tariffs, effectively invalidating both reciprocal and fentanyl-related duties. This significant legal shift creates a temporary destabilization of the tariff base but does not impact the fundamental reliability of duty drawback as a recovery tool, per the experts at CITTA Brokerage.
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UPDATE: On February 20, 2026, the Supreme Court ruled 6-3 that the IEEPA does not authorize the President to impose tariffs, effectively invalidating both reciprocal and fentanyl-related duties. This significant legal shift creates a temporary destabilization of the tariff base but does not impact the fundamental reliability of duty drawback as a recovery tool, per the experts at CITTA Brokerage.
They note that, while the now-void reciprocal tariffs were previously eligible for drawback, the fentanyl-related tariffs were never eligible under the program. Importantly, the ruling is specific to IEEPA and does not affect Section 301 or specific drawback-eligible goods under Section 232.
Businesses currently seeking refunds on previously paid IEEPA duties are advised to consult with a trade attorney regarding the best legal path. Importers must decide whether to file a protest with CBP or take their case to the Court of International Trade (CIT).
Finally, companies are cautioned against "double-dipping," as filing for a refund through the CIT prevents a simultaneous claim for drawback on the same duties. For more details, visit the original post. -Editor
As tariffs evolve under the Trump Administration (with challenges still pending before the U.S. Supreme Court), one certainty has emerged: levies on imported goods will play a central role in U.S. economic policy for the foreseeable future.
For beauty brands navigating this rapidly changing trade environment, various tariff mitigation strategies have become essential: foreign trade zones, bonded warehouses, tariff engineering and strategic sourcing shifts, just to name a few. Yet one tariff mitigation strategy stands out as perhaps the least understood and most underutilized by cosmetics and personal care companies: duty drawback.
This tariff mitigation strategy allows companies to reclaim up to 99% of duties, taxes and fees paid on imported goods that are subsequently exported or destroyed. Despite its financial potential, awareness in the beauty sector has been low. But that's changing fast. To understand why more brands are exploring drawback, Global Cosmetic Industry spoke with Sydnee Goodell, drawback consultant at CITTA Brokerage.
Your Duty Questions Answered: Q&A with Sydnee Goodell, CITTA Brokerage
Imagine you import foundation with an incorrect shade, or a moisturizer that fails shelf-life testing. If these products don't meet quality standards, you can destroy them under the supervision of a CBP-delegated authority and then file drawback to claim 99% of the duties you paid.Nina/peopleimages.com
What is duty drawback?
Goodell: The concept is simple: when goods enter the U.S., a tariff-imposed duty is assessed. The importer pays this duty, along with any taxes and fees, to U.S. Customs and Border Protection (CBP). In most cases, these costs are absorbed by the consumer.
But what if those goods leave the country? Most would agree, Uncle Sam really shouldn’t be drawing revenue from goods that are merely ‘passing through’ the U.S. Duty drawback allows businesses to recover up to 99% of these charges.
Who's eligible to file drawback claims?
Goodell: Importers, exporters and intermediate parties like contract manufacturers can file for drawback. The most straightforward scenario is when you're both the importer-of-record and exporter-of-record, as you should have all the documentation you need.
But it gets more complex when working with third parties. For instance, if you're importing ingredients but your contract manufacturer is exporting the finished products, you will need to coordinate with them to file claims. The beauty industry often involves multiple players in the supply chain, so most claimants retain a broker to secure cooperation with the entities that have the documentation drawback requires.
Does drawback apply to both finished goods and products that go through manufacturing?
Goodell: Yes, both. Unused merchandise drawback applies when you import and export finished products in their original condition. Manufacturing drawback applies when imported materials become part of exported products—like importing surfactants, formulating them into a cleanser, then exporting it.
You mentioned drawback may be claimed when imported goods are destroyed. How does that work?
Goodell: Imagine you import foundation with an incorrect shade, or a moisturizer that fails shelf-life testing. If these products don't meet quality standards, you can destroy them under the supervision of a CBP-delegated authority and then file drawback to claim 99% of the duties you paid.
How has the Trump administration's approach to tariffs changed drawback?
Goodell: The filing process hasn't changed much, but awareness and eligibility have. Some tariffs, like Section 301 on Chinese goods, allow for drawback. Others, like Section 232, generally don't, though there are exceptions.
With tariffs now applying to goods from over 90 countries, there are far more opportunities than most brands realize. Talk to your broker about what qualifies. Chances are, you have eligible imports.
What's a typical timeframe for recovering duties?
Goodell: Once CBP approves your drawback privileges application, you're typically looking at 45 days to receive payment. The challenge right now is that getting your privileges application approved can take anywhere from six to eighteen months, especially since CBP has been flooded with applications as more companies discover drawback.
The good news is you can start filing claims while your privileges application is under review. Given that you can claim on imports going back five years, it makes sense to get started sooner rather than later. Every month you wait is another month of potentially eligible imports that age out of that five-year window.
What documents are needed to file drawback?
Goodell: You'll need entry summaries, commercial invoices for imports and exports and proof of export documentation. A critical piece, especially when it comes to manufacturing drawback, is the inventory documentation that allows you to track goods using part numbers, quantities, dates and invoice links.
What are some common pitfalls?
Goodell: The most serious pitfall is filing claims you can't substantiate. I've seen cases where companies were submitting production dates or other data that simply couldn't be validated. If you file non-compliant claims, you're not just losing that money. You could be required to return everything you've recovered and lose your ability to file drawback altogether.
Poor internal communication is another big one. When your procurement, manufacturing and export teams aren't coordinating, you end up with gaps in documentation that kill your claims. The key is never to file anything you couldn't confidently defend in a CBP audit.
What are some best practices for maximizing returns?
Goodell: First and foremost, assign someone to own this program. Drawback can't be successful as a side project that gets passed around. You need someone accountable who understands both the financial opportunity and the compliance requirements.
Second, invest in your data infrastructure. You need systems that can track inventory through your entire supply chain, from the moment materials arrive through manufacturing and ultimately to export. Without that traceability, you simply don't have a viable program.
Finally, consider working with a broker who truly specializes in drawback. Some customs brokers offer it as an add-on service. But the most successful programs are done in partnership with specialists who maximize your returns by leaving no stone unturned.
Where can beauty brands learn more?
Goodell: Your first conversation should be with your current customs broker. Ask them directly about their drawback capabilities and experience—not all brokers handle drawback because it's quite specialized. If they don't have that expertise, ask for a referral to a brokerage that focuses specifically on duty drawback recovery.
As you explore your options, make sure to ask for some kind of preliminary assessment or online calculator to help you estimate your potential recovery based on your import and export volumes. That initial analysis is valuable because it helps you understand whether this is a $50,000 opportunity or a multi-million-dollar opportunity, which obviously changes how you prioritize it.
Given how much the tariff landscape shifted in 2025, now is an ideal time to have that conversation. Even if you've never thought about drawback before, the expanded tariff coverage means there's likely more opportunity than there would have been a few years ago.
