What are Foreign Trade Zones and bonded warehouses? Can they help me? A Foreign Trade Zone (FTZ) is a designated area within the United States where foreign and domestic goods can be treated as if they are outside the customs territory of the United States. Therefore, such goods are not considered imported until they leave the FTZ for domestic consumption, and thus will not be subject to duties, tariffs, and other applicable taxes while in the FTZ. Further, while in the FTZ, goods may be stored, inspected, repackaged, repaired, tested, cleaned, sampled, displayed, manipulated, mixed, processed, assembled, salvaged, destroyed, or reexported. A bonded warehouse is within the customs territory of the United States and is a secure facility in which imported dutiable goods may be stored or manipulated without payment of duty for up to five years from the date of importation. Although FTZs and bonded warehouses are similar, key differences include the following: • FTZs are often used for storing, testing, cleaning, processing, assembling, manufacturing, relabeling, repackaging, displaying, exhibiting, and repairing goods, while bonded warehouses are generally used for the storage of imported goods entered for warehousing. Further, manufacturing is not permitted in a bonded warehouse unless the goods are ultimately exported. • Goods may only be held in a bonded warehouse for five years, while goods in an FTZ can be held indefinitely. • Only foreign goods may be held in a bonded warehouse, whereas foreign and domestic goods can be held in an FTZ. • Bonded warehouses are subject to direct oversight, direction, and control of CPB, while FTZs are not. Determining whether either of these options can help you depends on factors such as your objectives, business operations and industry- specific activities, ability to comply with CBP regulations, and costs.
If I am NOT the IOR, can I pay the tariff for the IOR? If I pay the tariff, will doing so increase transaction value and result in an increased tariff amount? If you are not the IOR, you can be financially responsible for the tariff. However, paying the tariff may come with some risks, such as the following: • You cannot dispute or appeal charges directly with CBP because you are not the IOR. • If you are advancing duties with the expectation the IOR will repay you, there is a risk that they will refuse to pay or cannot pay you back. • If CBP audits the IOR and finds an issue, CBP might reassess past duties or issue penalties, and you may be caught in the financial fallout despite your good-faith compliance efforts. It is possible that taking financial responsibility for duty payments can result in an increased transaction value, thus causing an increase in the total tariff amount owed to CBP. However, a buyer may issue a rebate to the foreign seller or negotiate a reduction in price of the good after importation; the foregoing will have no effect on transaction value at the time of importation. If I AM the IOR and responsible for tariff payment, how do I pay the tariff? Should I use a customs broker? What are the associated costs? It is advisable to work with a customs broker if you are regularly importing goods. Customs brokers are licensed, regulated, and empowered by CBP to serve as intermediaries between the importer, exporter, and CBP. Notably, customs brokers (a) are familiar with compliance requirements for importing goods into the United States, (b) manage applicable documentation while the goods move across international borders, (c) coordinate payments of duties and taxes, and (d) are aware of any changes to import regulations. Customs broker fees vary; often, fees are tied to the commercial value of the shipment they are clearing, the complexity of the shipment, the specific services provided by the broker, and the particular type of commodity being imported.
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