The COVID-19 pandemic has triggered a surge in US companies setting up foreign trade zones (FTZs) to avoid President Donald Trump’s tariffs, as importers look for ways to minimize the impact of the ongoing trade war.
Originally established in 1934 during the Great Depression, FTZs are designated areas where companies can import goods duty-free and store them until they choose to sell or export. Nearly $1 trillion worth of goods were imported into these zones last year, accounting for almost one-third of all goods imported into the United States.
The zones, which can range from small rooms in warehouses to hundreds of acres, are highly secure and heavily enforced. Companies can manufacture and distribute goods out of one warehouse, benefiting from a tariff cushion until they release their products into US commerce.
According to Jackson Wood, director of industry strategy at Descartes, a logistics firm that helps companies set up and operate in FTZs, the interest in these zones has quadrupled since Trump announced tariffs on nearly every single country in April. Companies are stockpiling merchandise in these zones to maintain cash flow during uncertain times.
However, not all experts are optimistic about the impact of FTZs on US trade policy. The National Association of Foreign-Trade Zones warns that current trade regulations have made these zones more complicated for some companies, and many have lost their ability to maintain global competitiveness due to the tariffs imposed by Trump’s administration.
“The loss of this benefit is a major problem,” said Melissa Irmen, director of advocacy and strategic relations at the National Association of Foreign-Trade Zones.
Source: https://edition.cnn.com/2025/07/07/economy/foreign-trade-zones-tariffs-trump