This article is part two of a series to help businesses navigate trade strategies amidst tariff changes. Part one discussed Transfer pricing and tariffs: Strategic considerations for businesses. Next up: First sale declarations.
In today's globalized economy, businesses face an ever-changing landscape of tariffs, trade policies, and international supply chain challenges. For companies navigating these complexities, foreign trade zones (FTZs) present a strategic opportunity to reduce costs, improve logistical efficiency, and enhance overall competitiveness.
Understanding FTZs
FTZs are specially designated areas under the supervision of US Customs and Border Protection. These zones exist outside the formal US customs territory for tariff purposes, allowing businesses to import goods without immediately incurring duties.
Within an FTZ, companies can store, process, assemble, or manufacture products, postponing duty payments until the goods officially enter the US market. If products are re-exported instead, businesses may bypass US duties altogether. By leveraging FTZs, companies can exert greater control over their financial obligations, minimize risk, and streamline operations.
Why should manufacturers consider FTZs?
The benefits of utilizing an FTZ are particularly pronounced when dealing with volatile trade conditions, high tariffs, or complex customs procedures. Businesses operating in an FTZ can take advantage of several key benefits:
- Duty deferral and reduction: Since duties are not paid until goods leave the FTZ, businesses can improve cash flow and allocate resources more effectively. Additionally, if goods undergo a manufacturing or assembly process within the zone, companies may pay reduced duties based on the finished product’s classification rather than the individual component costs.
- Streamlined customs processing: FTZs offer logistical efficiencies by enabling businesses to consolidate shipments. This can result in expedited customs clearance, reduced paperwork, and overall smoother trade facilitation.
- Re-exporting without US duties: Companies that import goods for re-export purposes can avoid US duties entirely, allowing them to maintain a competitive edge in international markets.
In an era of uncertain trade policies, FTZs provide an essential tool for businesses seeking flexibility, predictability, and cost savings.
How BerryDunn can help
While the advantages of FTZs are compelling, the process of establishing operations within an FTZ requires careful planning and compliance. Regulations governing FTZs involve detailed application procedures, inventory tracking requirements, and operational best practices.
Our team can help guide businesses through the FTZ approval process, ensure compliance, and maximize the full benefits these zones offer. From initial consultation to implementation and ongoing management, we help companies optimize their supply chain strategies while remaining compliant with US trade laws.
Let’s talk strategy
Trade policies fluctuate, and tariff changes can significantly impact business operations. Taking a proactive approach to mitigate these risks is essential. Foreign trade zones provide a critical advantage, turning potential obstacles into opportunities.
If your company is looking to enhance efficiency, manage costs, and strengthen global trade operations, exploring FTZ solutions could be the right move. Contact us today to discuss how we can help your business navigate complexities and unlock valuable savings.