The continuing uncertainty surrounding US tariff rates on imports continues to be the biggest theme in world trade in 2025. Many importers are therefore looking for ways to minimize their exposure to these duties - and one option is to take advantage of special customs regimes like bonded warehouses and, increasingly, foreign trade zones (FTZs).
Indeed, it has been noted that the use of FTZs has soared since president Donald Trump first announced his 'reciprocal tariffs' on almost all US trading partners in April.
So what do these involve and why have they become of interest to US importers in recent months? Here's what you need to know.
What are Foreign Trade Zones?
FTZs are designated locations near US ports of entry that allow companies to move goods in and out of the US without paying import tariffs, taxes or other fees. For customs purposes, these locations - which can range from single rooms within larger warehouses to sites covering hundreds of acres - are considered to be outside the US. This means businesses can defer payments until items leave the zones, or reexport them without the need to pay duties.
These locations date back to the 1930s, when they were implemented to help boost US competitiveness during the Great Depression and now exist in all 50 states, as well as Puerto Rico. According to CNN, there are 374 such zones around the country, with no restrictions on how long goods may be stored.
FTZs fall into two categories. These are general purpose, which are often warehouses in which multiple businesses can rent space to store goods, and special purpose. Also known as subzones, special purpose zones are granted to individual companies and allow large firms to conduct manufacturing operations or other processing.
Why are firms turning to these options?
FTZs have become increasingly popular this year as many companies have rushed to import goods into such locations before the implementation of new, higher tariff rates. While many of these duties have changed or been postponed multiple times, the use of FTZs can offer businesses much more certainty in a challenging environment. This allows them closer control over their cash flow by deferring the payment of duties.
Previously, these zones were considered a fairly niche option, as special purpose FTZs in particular require significant investment. However, in 2025's changing tariff environment, the business case for using them has become much clearer.
Jeffrey Tafel, president of the National Association of Foreign Trade Zones, told the Financial Times that since Mr Trump returned to the White House in January, interest in FTZs has increased two to fourfold.
He also explained to CNBC earlier this year: "With tariff changes happening so quickly, there are companies that are looking for FTZ storage space in order to defer the duties until they are able to decide how they want to proceed with the merchandise, much of which was purchased before the tariffs were known."
The challenges facing the use of FTZs
Despite the interest, FTZs have not been immune to changes in tariff policy. For instance, until this year, one of the advantages of FTZs was the option of paying 'inverted tariffs'. This meant companies could choose to either pay duties on the finished product or individual components - whichever is cheaper.
However, several of Mr Trump's executive orders have ended these benefits for some categories of goods, fixing duty rates to those of the raw materials. As a result, other solutions may be required, such as bonded warehouses, which can allow firms to store goods for a certain amount of time in the hope that tariff rates will fall.
Jason Strickland, director of sales at logistics firm Givens, told CNBC: "The goal is to protect your cash flow. You don't want to bring in all your goods and spend your cash flow against tariffs that may not be here in six weeks [or] six months. If you can defer until the market is ready to consume those goods, I think that's a win-win."