More Section 301 Tariffs? What You Need to Know About Drawback Eligibility

The tariff landscape shifted dramatically in early 2026. After the Supreme Court struck down the administration’s IEEPA-based tariffs in February, U.S. Trade Representative Jamieson Greer announced a new wave of Section 301 investigations targeting 60 economies over structural manufacturing overcapacity. The move signals a more legally durable approach to trade enforcement, one with direct implications for companies that import, export, or destroy goods in the United States.

At CITTA Brokerage Co., duty drawback is all we do. The transition from IEEPA to Section 301 raises urgent questions about drawback eligibility, timelines, and strategy. Based on our experience with prior Section 301 tariffs, we believe this shift presents both a challenge and a significant opportunity for importers who act early.

What are the New Section 301 Investigations?

On March 11, 2026, the USTR initiated Section 301 investigations under the Trade Act of 1974 into the trade practices of 60 economies. The investigations target many of the United States’ largest trading partners, including China, the European Union, Mexico, Japan, South Korea, India, Taiwan, Vietnam, Canada, Brazil, Thailand, Malaysia, Indonesia, and the United Kingdom, among others. According to the USTR notice, the probes focus on whether these economies have developed production capacity that exceeds domestic demand, displacing U.S. manufacturing.

The USTR the following day into 60 economies over failures to impose and effectively enforce bans on the importation of goods produced with forced labor. As Fortune reported, Section 301 tariffs have survived more than 3,600 legal challenges, making them far more durable than the IEEPA tariffs the Supreme Court struck down.

Collectively, the investigations cover a broad cross-section of North America, Europe, Asia, the Middle East, South America, and Africa, signaling the administration’s intent to use Section 301 as a global trade enforcement mechanism rather than a China-specific tool.

Why Section 301 Duties are Expected to be Drawback Eligible

Duty drawback allows eligible companies to recover up to 99% of duties, taxes, and fees paid on imported goods that are subsequently exported or destroyed. Administered by U.S. Customs and Border Protection, the program has been part of U.S. trade law since 1789.

The Section 301 tariffs imposed during the first Trump administration in 2018 have been confirmed as drawback eligible, and the Biden administration maintained that eligibility when it extended those tariffs in 2024. There is no statutory basis for treating the new wave differently; eligibility follows the statute, not the specific investigation.

The temporary Section 122 tariffs currently in effect are also generally drawback eligible. For importers paying duties under either Section 122 or a future Section 301 remedy, drawback remains one of the few mechanisms available to recover a substantial portion of those costs through export or destruction claims.

Anti-dumping and countervailing duties remain ineligible for drawback. However, the new Section 301 investigations target overcapacity and forced labor rather than unfair pricing or subsidies, placing them squarely within the drawback-eligible category.

How the Compressed Timeline Affects Your Strategy

Section 301 investigations can legally take 12 to 18 months. However, the administration intends to finalize findings by late July 2026, coinciding with the scheduled expiration of temporary Section 122 tariffs. According to CNBC, this compressed timeline is designed to ensure continuous tariff coverage.

A note on Section 122: On May 7, 2026, the U.S. Court of International Trade ruled in a 2–1 decision that the Section 122 tariffs are unlawful. However, the court declined to issue a universal injunction — relief applies only to the three named plaintiffs — and the Federal Circuit issued an administrative stay on May 12, preserving the status quo while the appeal proceeds. For most importers, Section 122 duties continue to apply at entry. More importantly, this ruling does not change the Section 301 trajectory: the administration is proceeding with investigations on the same timeline regardless of how the Section 122 litigation resolves.

The public comment period closed April 15, 2026. Forced labor hearings ran April 28 through May 1, and overcapacity hearings concluded May 8. USTR is now reviewing testimony and the written record as it moves toward findings and proposed remedies. With the investigative process largely complete, importers should focus on the following steps:

• Connect with an experienced drawback broker immediately. Getting your application submitted now positions you to file claims as soon as new tariffs take effect, and CBP approval timelines have stretched in recent months.
• Audit your import and export records for the past five years. Drawback claims carry a five-year statute of limitations, and every day that passes, eligible shipments age out of recovery.
• Ensure your inventory and export documentation is in order. Proper proof-of-export records and inventory tracking are essential for compliant claims, and missing documentation is the most common reason eligible companies fail to recover.

Common Misconceptions About Duty Drawback

Many companies that qualify for drawback never pursue it because of assumptions that are simply inaccurate. At CITTA, we encounter these misconceptions regularly.

• Drawback is too complicated to be worth the effort. The process is complex, but with the right broker, the heavy lifting is handled for you. Companies routinely recover hundreds of thousands of dollars in duties they already paid.
• Setting up a drawback program requires a large upfront investment. CITTA operates on a straight contingency basis; we do not get paid until the client gets paid. There are no upfront costs to establish your program.
• Only direct importers qualify for drawback. Companies that purchase from domestic suppliers who import goods can also qualify. If you are paying duties directly or indirectly and your products are subsequently exported or destroyed, you may be eligible.
• You must choose between drawback and other mitigation strategies. Drawback works alongside other tools like tariff exclusions, classification challenges, and protests. It is not an either-or decision; most clients pursue multiple strategies simultaneously.

Exclusions, Stacking, and What to Watch For

The original Section 301 tariffs on China introduced exclusions that allowed certain importers to avoid duties on qualifying products. If the new investigations follow the same pattern, similar exclusion processes will likely emerge. When an exclusion is granted, it receives a unique HTS code and can apply retroactively, affecting drawback claims already filed.

One advantage of the exclusion process is that companies can piggyback on exclusions granted to other importers using the same HTS code, opening recovery opportunities across the board without duplicating the application effort.

As these investigations unfold, importers should monitor the following risks:

• Extended claim liquidation timelines. When tariff eligibility is in flux, CBP may hold drawback claims in unliquidated status until final determinations are made, delaying refunds but not eliminating them.
• Retroactive exclusion adjustments. If an exclusion is granted after a drawback claim has been filed, the tariff portion covered by the exclusion must be stripped from the claim. An experienced broker manages this process proactively.
• Section 232 overlap. Most Section 232 tariffs are not drawback-eligible, with limited exceptions for auto parts and wood products introduced in 2025. If your imports face both 232 and 301 duties, the 232 portion is simply excluded from the drawback calculation.
• IEEPA refund interactions. CBP has deployed Phase 1 of the CAPE (Consolidated Administration and Processing of Entries) portal within ACE and is actively processing IEEPA refund claims. Companies that filed drawback on now-invalidated IEEPA tariffs should work with their broker now to reconcile those claims and avoid overpayment issues as refunds are issued.
• The 2018 China tariffs are under four-year review — again. In May 2026, the USTR initiated a second four-year review of two separate 25% Section 301 levies on China originally imposed in 2018, covering a combined $32 billion of imports across more than 500 tariff subheadings. These tariffs are already confirmed drawback eligible and have been maintained through multiple administrations. The review requires at least one domestic industry continuation request to advance to a second phase; if it does, USTR will solicit public comment on the tariffs’ effectiveness and economic impact. Importers paying these duties should have a drawback program in place regardless of how the review resolves — the history of these tariffs suggests they are far more likely to be extended than eliminated.

Where the Section 301 Process Stands Now

The formal public input phase of both Section 301 investigations is complete. Written comments closed April 15, 2026. Forced labor hearings concluded May 1, and overcapacity hearings wrapped up May 8. More than 175 witnesses testified across the proceedings, and rebuttal comments were due approximately one week after each investigation’s final hearing date.

USTR is now reviewing the full record — written submissions, hearing testimony, and rebuttal comments — as it works toward findings and proposed tariff remedies. With the investigation and hearing phases now complete, the process has entered the statutory decision window in which USTR can move rapidly toward implementation of new tariffs. The administration has been explicit that its goal is to have Section 301 tariffs in place before the Section 122 tariffs expire on July 24, 2026, meaning importers could see new duties imposed with very little additional lead time. That window is closing quickly.

For importers, the practical implication is straightforward: the input phase is over, but the preparation phase has never been more important. Companies that have not yet evaluated their drawback eligibility or initiated a program are already behind.

Why Now is the Time to Act

Tariffs are not going away. Whether they arrive through Section 301, Section 122, or another mechanism, U.S. trade policy points toward sustained duties on imports from major trading partners. For companies paying those duties, the question is not whether to pursue drawback, but how quickly they can get a program in place.

Many companies have spent the past several years pursuing alternative tariff mitigation strategies via shifting manufacturing, restructuring supply chains, using bonded facilities, seeking exclusions, or challenging classifications. While those approaches can help in certain situations, most involve significant cost, operational disruption, political uncertainty, or only partial duty reduction. Duty drawback is different. For qualifying imports that are subsequently exported or destroyed, drawback provides a direct statutory recovery mechanism that does not depend on where goods are sourced, whether exclusions are granted, or how future trade negotiations unfold. In an increasingly unpredictable tariff environment, that makes drawback one of the few mitigation strategies companies can directly control.

Drawback requires no capital expenditure (depending on your broker), no special infrastructure, and no warehousing changes. With a five-year lookback period, companies starting today can recover duties paid as far back as 2021. Once approved, most claimants receive refunds within 45 days of filing.

At CITTA, we work on a contingency basis: you pay nothing until you receive your refund. We handle everything from the initial application through claim filing and CBP compliance.

Ready to find out how much you could recover? Use our drawback calculator to estimate your refund, or schedule a discovery call with our duty drawback specialists. With every passing day, eligible shipments age out of the five-year window. The money is yours; let us help you get it back.