A U.S. Foreign Trade Zone (FTZ) is a secure, U.S. Customs and Border Protection (CBP)-approved area where imported goods can be stored, assembled, or even manufactured- without immediately paying customs duties or taxes.
Goods in an FTZ can be:
Stored indefinitely, as long as they remain compliant
Manipulated or manufactured without triggering duties
Withdrawn for U.S. consumption, at which point duties are assessed
Re-exported or destroyed, avoiding duties entirely
This setup gives businesses unprecedented control over timing, cash flow, and tariff exposure.
FTZs offer two options for how imported goods are treated:
Duty is locked in based on the item’s condition when it enters the zone
Typically used when the raw materials or parts have a lower duty rate than the finished product
Required for goods subject to anti-dumping or countervailing duties (ADD/CVD)
Duty is assessed based on the condition of the goods at withdrawal
Allows businesses to take advantage of inverted tariffs, paying the lower of:
The rate on the imported material
Or the rate on the finished good
Bonus: If you export, no duties are paid at all. Waste and scrap can also be exempt.
Both FTZs and bonded warehouses can reduce or defer duties, but they’re not interchangeable.
| Feature | FTZ | Bonded Warehouse |
|---|---|---|
| Storage Time Limit | Indefinite | 5 years |
| Manufacturing Allowed | Yes | No |
| Duties on Re-Exports | Exempt | May still apply |
| Duty Payment Timing | Upon withdrawal for U.S. consumption | Same |
| Entry Filings | Weekly consolidation allowed | Filed per shipment |
| Setup Complexity | Higher | Lower |
You manufacture, kit, or assemble goods using imports
You’re seeking inverted tariff benefits
You want to consolidate customs filings (weekly entries)
You need long-term storage and operational flexibility
You only need short-term storage for re-export
You’re not adding value to goods (no processing)
You want faster setup with fewer regulatory hurdles
Many companies use both: bonded warehouses for overflow and FTZs for core operations.
With today’s freight volatility, tighter margins, and global fulfillment demands, fast-moving brands are using FTZs to stay competitive.
FTZs let you defer duties or avoid them entirely if goods are re-exported. That flexibility matters when global trade policies shift on a dime.
No upfront duties means more working capital for marketing, talent, and growth—crucial for scaling brands.
CPG and DTC companies often assemble kits or bundles from imported components. FTZs allow that without triggering immediate duties.
Shipments re-exported from an FTZ aren’t taxed by the U.S., reducing landed costs for global fulfillment operations.
You can work with 3PLs or FTZ operators already certified under the Alternative Site Framework (ASF) to avoid long setup times. Some sites can be activated in as little as 30 days.
The process takes planning, but the benefits are worth it. Here's a simplified overview:
Magnet site: Pre-approved industrial zone for multiple users
Usage-driven/subzone: Single-operator, often faster approval (30–60 days under ASF)
Estimate duty deferral or elimination (e.g., 67% duty on some brass products)
Factor in inverted tariffs and reduced filing costs
Submit a Letter of Transmittal, executive summary, and supporting exhibits
Coordinate with your local CBP port
File CBP Form 214
Implement inventory controls, fencing, security
Pass audits and maintain compliance
Store, manufacture, and ship as approved
Submit annual activity reports to the FTZ Board
Tip: You can often partner with a grantee (such as a port authority or 3PL) instead of applying from scratch.
Whether you're a manufacturer, importer, or fast-growing CPG brand, FTZs offer a powerful way to reduce costs, increase flexibility, and future-proof your global supply chain.
They’re not just for enterprise giants anymore—brands of all sizes are using FTZs to gain a competitive edge in 2025.
Need help evaluating FTZs or exploring bonded options? We help importers and manufacturers navigate FTZ setup, customs compliance, and third-party partnerships every day. Reach out to learn how we can support your duty-saving strategy.