Strategies to Minimize Tariffs - Duty Drawback

International Trade Resources Podcast

Today on the International Trade Resources Podcast, our host Kim Kirkendall is joined by Tony Nogueras, owner of Alliance International, to break down Duty Drawback. Not enough companies take full advantage of this program which allows people to recapture duties on products that were imported - either when they later export the same or similar goods or when there is another triggering event. Tony joins the show to discuss how companies can identify opportunities and maximize recapture.

First, Kim and Tony discuss how tariffs have been an impediment to many companies' profitability when importing from China, and how duty drawback can help recapture some of that expense. These tariffs still have a huge impact on US companies and the cost of goods in the United States. There have also been exclusions and exceptions in place or have expired, which can make navigating section 301 Tariffs particularly difficult.

Duty Drawback is a US government program where you can reclaim duty paid in certain situations, such as when you export or when goods are deemed obsolete. The regulations in Customs Regulations Chapter 190 specifically allows for the refund of duties, taxes, fees incurred at the time of importation if you have product that's subsequently exported. We can look at this as an important export incentive program. However, there are other factors that might need to be considered, such as foreign trade zones, bonded warehouses, and temporary import bonds that can affect tariff mitigation strategies.

Tony dives into the details of how duty drawback works; the 5 year lookback period, the difference between filing based on direct identification or substitution, and calculating raw materials imported value compared to exported finished goods. Often a claimant can see potential recovery, but aren’t sure how to match an export back to a particular importation. Navigating that process can be very painful.

Lastly, Kim and Tony cover the 2015 program, TFEA, and how it makes it easier for companies to optimize duty drawbacks, what process to follow, and what documentation to keep in order to be successful and limit liability. Under the new substitution rules, there’s less worry about material grades, part numbers, and specifications. They’ve liberalized the substitution matching so that we only have to match the harmonized tariff schedule number at the 8th digit.

Listen now and start exploring strategies to minimize tariffs and maximize Duty Drawback!

KEY TAKEAWAYS:

• Duty Drawback can seem overwhelmingly complicated, but it can also save the company significant money
• The US government TFEA regulations have created more opportunities to file for duty drawback
• It is important to understand the regulations, what procedures to follow, and how to document the basis for filing.

Episode Sponsors:

Acclime China:

https://china.acclime.com/

Corporate Services and full Accounting/CPA/Tax for China.

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