Shipping From China During the Tariff War: Drawback, FTZ, and Your Options

As of April 2025, importers shipping from China face a layered tariff structure where not all duties are treated equally — and the distinction matters enormously if you’re counting on duty drawback or post-summary correction to recover what you pay. Knowing which portions of the China tariff are drawback-eligible, and which aren’t, should drive your decision to ship, hold, or divert goods to an FTZ.

Key takeaways

The 20% IEEPA (fentanyl) tariff on Chinese goods is NOT eligible for duty drawback — money you pay on that portion is not recoverable through the drawback mechanism.
The reciprocal tariff portion (which escalated from 34% to 84% to 104%+ as of early April 2025) is likely eligible for duty drawback, and probably for post-summary correction as well.
Goods that departed China before the escalating reciprocal tariffs took effect are not subject to those rates — only the pre-existing 20% IEEPA tariff applies to in-transit shipments.
Free Trade Zones (FTZs) and bonded warehouses let you defer duties until you decide to enter goods into U.S. commerce — or re-export them.
If you can hold back shipments and remain profitable, waiting is the lowest-risk path.

What the China tariff structure looked like as of April 2025

By early April 2025, the tariff on Chinese-origin goods had become a stack of distinct measures. Understanding each layer matters because they have different legal bases — and different drawback and refund treatment.

Tariff Layer	Rate (as of April 2025)	Duty Drawback Eligible?
Base HTS duty rate	Varies by product	Yes (standard rules)
Section 301 tariff	7.5%–25% depending on list	Yes
IEEPA fentanyl tariff	20%	No — not drawback-eligible
Reciprocal tariff (escalating)	34% → 84% → 104%+	Likely yes

The IEEPA fentanyl tariff of 20% was imposed under a separate executive authority, and as of April 2025, CBP had confirmed it is not eligible for duty drawback. Whatever you pay on that 20% portion is gone. There’s an open question about whether post-summary correction or protest might eventually be available — CBP had not issued guidance on that as of this writing.

The reciprocal tariff portion (the layer that escalated rapidly in early April 2025) is treated differently. It is likely eligible for duty drawback and probably eligible for post-summary correction. That means if you pay the reciprocal tariff now and the situation later de-escalates, there are mechanisms to recover a significant portion of what you paid — subject to the usual drawback rules and timelines.

For a full breakdown of how the China tariff layers compound with each other, see our post on what the China tariff really means for importers.

What about shipments already in transit?

As of April 9, 2025, any shipment that had already departed China before the escalating reciprocal tariff rates were imposed was not subject to those new rates. Those in-transit goods were subject to the pre-existing 20% IEEPA tariff (plus applicable base HTS duty and Section 301), but not to the newly elevated reciprocal tariff rates. If you had shipments on the water at that moment, the duty calculation was significantly more favorable than for goods departing after the escalation.

Should you hold back bookings?

If your product margins cannot absorb the full combined tariff and you cannot pass costs to customers, the safest path is to hold back new bookings until the situation stabilizes. You avoid locking in an unrecoverable cost (the 20% IEEPA portion) and avoid the risk of new escalations hitting goods while they’re in transit. The downside is covered in our post on the China shipping dilemma — waiting has its own risks, particularly a freight surge if a deal is reached while you’re sitting on the sidelines.

The FTZ option: ship without committing to clearance

A Foreign Trade Zone (FTZ) is a designated area within U.S. territory where goods can be received, stored, and manipulated without being considered officially imported. Duties aren’t paid until goods leave the FTZ and enter U.S. commerce — or not at all if they’re re-exported.

If you need to ship goods from China but aren’t sure you can clear them at current tariff rates, an FTZ gives you a holding pattern:

Goods are physically in the U.S. (or at a U.S. port) without triggering duty liability.
You can wait for the tariff situation to change before deciding to clear or re-export.
If rates come down or a deal is reached, you clear at the lower rate.
If things get worse, you can re-export without paying duties.

FTZ use involves costs — facility fees, handling, and sometimes zone activation for your specific goods. Your customs broker can help you assess whether the economics make sense for your shipment size and timeline.

The bonded warehouse option

A bonded warehouse operates on similar logic to an FTZ for these purposes: goods are stored under CBP bond, duties are deferred until withdrawal into U.S. commerce, and re-export without duty payment remains an option. Bonded warehouses are more widely available than FTZs and may be the more practical choice for most importers. The key difference is that in a bonded warehouse, goods are considered imported (they’ve arrived) but duty is simply deferred — whereas an FTZ has a distinct legal status outside the U.S. customs territory.

For practical guidance on using these tools alongside the ship-now-vs.-wait decision, see our post on the China shipping dilemma.

If you pay the tariff: what’s recoverable

If your business needs the goods and you decide to clear at current rates, here’s the recovery picture:

The 20% IEEPA portion: not recoverable via drawback. Plan to absorb this.
The reciprocal tariff portion: likely recoverable via drawback if you subsequently export the goods or use them in a drawback-qualifying manufacturing process. The standard drawback timeline applies — claims must generally be filed within 5 years of importation.
Post-summary correction and protest are additional potential avenues, particularly if tariff rates change after your entry is filed. Your broker can monitor for opportunities as guidance develops.

Drawback is a CBP program that refunds up to 99% of duties paid on imported goods that are subsequently exported. It requires meticulous recordkeeping and is subject to its own eligibility rules — it doesn’t apply automatically. If drawback recovery is part of your strategy, discuss the recordkeeping requirements with your broker now, not after the goods are cleared.

For a broader view of the current tariff environment, including the 90-day pause announced later in April 2025, see our post on the US–China trade deal and 90-day pause.

Frequently asked questions

Is the 20% IEEPA fentanyl tariff eligible for duty drawback?

No. As of April 2025, CBP confirmed that the 20% IEEPA tariff on Chinese goods is not eligible for duty drawback. Importers who pay this tariff cannot recover it through the drawback mechanism. Whether post-summary correction or protest could eventually apply was an open question at the time — CBP had not issued definitive guidance.

What portion of the China tariff can be recovered via drawback?

The reciprocal tariff portion — the layer that escalated from 34% to 84% to 104% and beyond in early April 2025 — is likely eligible for duty drawback and possibly post-summary correction. Base HTS duties and Section 301 tariffs are also generally drawback-eligible under existing rules.

What is an FTZ and how does it help during tariff uncertainty?

A Foreign Trade Zone is a U.S. Customs-designated area where goods can be received and stored without entering U.S. customs territory. Duties are not owed until goods leave the FTZ for U.S. commerce. If you store goods in an FTZ and conditions change favorably, you can clear at the new rate — or re-export without ever paying duties.

Are shipments that left China before the tariff escalation affected?

As of April 9, 2025, shipments that departed China before the escalating reciprocal tariffs took effect were not subject to those new rates. They remained subject to the 20% IEEPA tariff and any pre-existing Section 301 and base HTS duties.

How is a bonded warehouse different from an FTZ?

Both defer duty payment, but an FTZ is legally outside U.S. customs territory — goods haven’t officially entered the U.S. until they leave the zone. A bonded warehouse stores goods that have arrived in the U.S. under customs bond, with duty deferred until withdrawal. Both allow re-export without paying duties. Bonded warehouses are more widely available; FTZs have specific activation requirements but may offer additional benefits for certain operations.