Foreign Trade Zones (FTZ)

Foreign Trade Zones are designated areas within or near U.S. Customs territory where goods may be admitted without formal customs entry or payment of duties. Goods in an FTZ can be stored, tested, sampled, relabeled, repackaged, displayed, destroyed, cleaned, assembled, manufactured, or processed — all without being subject to U.S. duties until they enter U.S. commerce.

One key FTZ advantage is the inverted tariff benefit. When components have a higher duty rate than the finished product, manufacturers in an FTZ can elect to pay the lower finished-product rate when entering the goods into U.S. commerce. This can result in significant duty savings for manufacturing operations.

Goods admitted to an FTZ can receive different status designations: Privileged Foreign (PF) status locks in the classification and duty rate at the time of admission. Non-Privileged Foreign (NPF) status allows the rate to be determined at the time of entry into U.S. commerce. Zone-Restricted status means the goods must be exported or destroyed — they cannot enter U.S. commerce.