The Environmental Impact of Duty Drawbacks on Manufacturing

Duty drawbacks aren’t just financial levers—they can also advance sustainability. This article explores how manufacturers use drawback programs to support environmental initiatives alongside business goals.

Drawbacks create incentives that align with sustainable practices:

• Reduced waste through efficient resource utilization

• Encouraged recycling and remanufacturing

• Financial support for sustainable technology investments

• Promotion of circular economy models

When strategically implemented, refunds can fund green initiatives that might otherwise lack immediate ROI.

Rejected goods draw a key environmental benefit: companies can recoup duties when exporting or destroying out-of-spec merchandise under customs supervision rather than landfilling it.

Case study: a furniture manufacturer recovered $45K by properly documenting destruction of contaminated wood, ensuring safe disposal over landfill.

Duty drawbacks reinforce circular models in three areas:

Manufacturers importing components, assembling products, and exporting finished goods can claim manufacturing drawbacks—encouraging remanufacturing/refurbishment for export.

When imported materials enter products that later get recycled and exported, value is captured at multiple points, incentivizing collection and reprocessing.

Companies retaining ownership of assets (leasing, PaaS) can reclaim duties when exported at end-of-life for recycling or remanufacturing, supporting circular ownership models.

A sustainable apparel brand importing organic cotton and dyes, manufacturing domestically, and exporting part of its production recovered $120K annually via Evana.

They reinvested 50% into a closed-loop recycling program, reduced effective import costs, and strengthened sustainability metrics.

Sustainable materials often cost more. Drawbacks can offset this premium by reducing import costs, improving margins, and generating cash for green projects.

TFTEA’s 8-digit HTS substitution standard lets companies experimenting with sustainable materials claim drawbacks even while partially using conventional inputs—as long as both share HTS classifications.

Drawback recoveries can bankroll ISO 14001 systems, product certifications, carbon assessments, and LCAs—initiatives that enhance environmental performance and open new markets.

Though not widely recognized in policy, opportunities exist: reform could reward sustainable materials, trade deals may add sustainability criteria, and businesses can document environmental uses of refunds to influence policy.

1. Conduct a drawback assessment (with Evana) to identify opportunities.

2. Map sustainable inputs/outputs against import/export flows.

3. Allocate a portion of refunds to sustainability projects.

4. Maintain documentation connecting claims to environmental impacts.

5. Report the linkage in corporate sustainability communications.

Drawbacks can finance sustainability initiatives, enabling manufacturers to recover funds while investing in greener operations. Evana helps companies capture refunds and strategically deploy them to support environmental goals and long-term competitiveness.