INTERNATIONAL
How foreign-trade zones became a tariff shelter for US importers
Boxed goods inside foreign trade zone approved warehouse, Chandler, Arizona, United States. - Screengrab/REUTERS
WITH just nine employees working for his small business, Terry Goodin, CEO of Sportaflex, worries that without relief from tariffs, his employee count can fall to only three. His company, which imports fencing systems from China, has been significantly impacted by the tariffs imposed on aluminum and steel. And despite his conservative beliefs and having voted for President Donald Trump, he disagrees with the way the tariffs have been handled.
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“I feel like American business people are being punished,” he said.
Now more than before, Goodin is relying on storing his goods at a foreign-trade zone warehouse (FTZ), a federally designated area that allows businesses to defer import duties.
“Tariffs are imposed basically when they hit the port, but if you’re fortunate enough to find a foreign-trade zone, you can move those from the port into the foreign-trade zone. And you don’t eliminate tax, the tariff, but you do defer it. And then at such a point that you need the goods to take out of the warehouse, you simply take those out, pay for the portion that you’ve taken,” Goodin explained.
FTZs are not new. They were developed back in 1934 and are located within a 60-mile radius of a U.S. port of entry, governed by the US FTZ Board and the U.S. Customs and Border Protection (CBP).
“It was part of the New Deal that was signed by President Roosevelt to help get us out of the Great Depression,” said David Harlow, President of IT Diligence International, a firm specializing in customs compliance and international trade.
They are attracting renewed interest as businesses look for ways to navigate trade tensions.
As a consultant to business owners seeking information on FTZs, Harlow says he has seen a one-hundred percent increase or more in companies wanting to learn and understand how they can mitigate and navigate tariffs.
James Peacock, CEO of SKU distribution, the FTZ warehouse storing Goodin’s products, has also seen an increase from a warehouse owner standpoint.
“We went from maybe a couple of calls a month to 10 calls every day and then we had probably three or four submissions online asking about the foreign-trade zone and was it available,” Peacock said.
Using software linked to U.S. Customs and Border Protection, SKU distribution logs every product and its corresponding information. A storage and setup fee is charged for customers.
“So every importer that comes into a foreign-trade zone has to have their own software license. So there is that one step that has happen. That is different than not using a foreign-trade zone,” explained when being asked if there was a catch.
“But outside of that, the only difference is you’re deferring your duties and taxes.”
For Goodin, the FTZ is an opportunity to buy time and conserve money, thereby improving cash flow. He started his company in 2009 and has been importing products for 13 years. He says he’s faced tariffs on and off, “but nothing like now,” he said. “We were content during, you know, up to the time President Trump was elected to pay our 25 percent, but since then, at 145 percent, it’s extremely painful.”
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AI Brief
- US businesses increasingly use foreign-trade zones (FTZs) to delay paying high import tariffs.
- FTZs allow importers to store goods duty-free until needed, easing financial strain and improving cash flow.
- Consultants and warehouse operators report a surge in FTZ interest as tariffs climb under current trade policies.
“I feel like American business people are being punished,” he said.
Now more than before, Goodin is relying on storing his goods at a foreign-trade zone warehouse (FTZ), a federally designated area that allows businesses to defer import duties.
“Tariffs are imposed basically when they hit the port, but if you’re fortunate enough to find a foreign-trade zone, you can move those from the port into the foreign-trade zone. And you don’t eliminate tax, the tariff, but you do defer it. And then at such a point that you need the goods to take out of the warehouse, you simply take those out, pay for the portion that you’ve taken,” Goodin explained.
FTZs are not new. They were developed back in 1934 and are located within a 60-mile radius of a U.S. port of entry, governed by the US FTZ Board and the U.S. Customs and Border Protection (CBP).
“It was part of the New Deal that was signed by President Roosevelt to help get us out of the Great Depression,” said David Harlow, President of IT Diligence International, a firm specializing in customs compliance and international trade.
They are attracting renewed interest as businesses look for ways to navigate trade tensions.
As a consultant to business owners seeking information on FTZs, Harlow says he has seen a one-hundred percent increase or more in companies wanting to learn and understand how they can mitigate and navigate tariffs.
James Peacock, CEO of SKU distribution, the FTZ warehouse storing Goodin’s products, has also seen an increase from a warehouse owner standpoint.
“We went from maybe a couple of calls a month to 10 calls every day and then we had probably three or four submissions online asking about the foreign-trade zone and was it available,” Peacock said.
Using software linked to U.S. Customs and Border Protection, SKU distribution logs every product and its corresponding information. A storage and setup fee is charged for customers.
“So every importer that comes into a foreign-trade zone has to have their own software license. So there is that one step that has happen. That is different than not using a foreign-trade zone,” explained when being asked if there was a catch.
“But outside of that, the only difference is you’re deferring your duties and taxes.”
For Goodin, the FTZ is an opportunity to buy time and conserve money, thereby improving cash flow. He started his company in 2009 and has been importing products for 13 years. He says he’s faced tariffs on and off, “but nothing like now,” he said. “We were content during, you know, up to the time President Trump was elected to pay our 25 percent, but since then, at 145 percent, it’s extremely painful.”