There Are Hundreds of Temporary Tariff‑Free Zones — and They’re in the U.S. — Unlocking strategic shelters for American businesses amid rising tariffs

1. What Are These Tariff‑Free Zones?

Imagine an area in the U.S. where imported goods can sit, be manufactured, or undergo value‑added processes without paying import duties—until they’re officially released into U.S. commerce.

These are known as foreign-trade zones (FTZs), also called bonded zones. They’re not new—they date back to 1934 and were created to soften the impact of the Smoot‑Hawley tariffs—but their role in today’s international trade has grown exponentially.

There are currently 374 FTZs across all 50 states and Puerto Rico. These areas are legally considered outside U.S. customs territory, meaning duties and tariffs are delayed or avoided altogether until goods leave the zone for domestic sale. If items are later exported, they sometimes escape duties forever.

2. Why Businesses Are Piling into FTZs

2.1 Tariff Mitigation Strategy

With sweeping tariff actions unleashed under the Trump administration, including sweeping “Liberation Day” tariffs and threats of 10–40% duties on various countries and goods, businesses have scrambled to minimize costs. Because FTZs defer duty payments, companies can better manage cash flow and avoid paying upfront charges—especially on high-duty goods in sectors like steel, autos, electronics, and consumer goods.

2.2 Flexibility and Cost Optimization

FTZs don’t just pause tariffs—they provide strategic options. Companies can:

• Store goods indefinitely before deciding what to do with them.

• Manufacture or assemble products domestically under a duty-deferral structure.

• Choose whether import duties are assessed on raw materials or the final product (whichever is cheaper).

• Re-export goods from the zone without ever paying duty.

E.g., at Houston’s FTZ 84, businesses once only storing imports now operate full manufacturing lines, helping to stabilize local employment and investments.

3. Real-World Impact: Case Studies

3.1 Houston’s FTZ 84 – “Tariff Sanctuary”

One of the nation’s largest FTZs, FTZ 84 in Houston processed around $50 billion in goods in 2022. Its facilities—both public and private—enable businesses to defer duties and flexibly manage inventories without location constraints. Firms assembling goods domestically benefit from duty deferral while simultaneously appealing to global markets through exports.

3.2 Warehouse in Mesa, Arizona

SKU Distribution’s 110,000‑sq-ft bonded warehouse in Mesa has become a lifeline. Initially underutilized, it’s now buzzing as U.S. importers reroute cargo there to “buy time” until tariffs are due. SecureIt Tactical, a gun‑safe seller, and Red Aspen, a cosmetic company, are among those using Mesa’s FTZ to delay paying tens of thousands in immediate duties.

Interior production, like inventory assembly and packaging, can occur with zero tariffs unless, or until, the goods are sold domestically. Such FTZs helped turn Phoenix-area desert into a chip-manufacturing hotspot, with companies like Apple and Intel employing thousands there.

4. The Broader FTZ Landscape

4.1 National Surge in Utilization

Interest has skyrocketed—queries to FTZs have quadrupled as firms scramble to shield supply chains from tariff shocks. The National Association of Foreign‑Trade Zones (NAFTZ) confirmed a significant rise in demand for FTZ benefits.

Moreover, bonded warehouses—another option for tariff deferral—are booming, with over 1,700 operating nationwide. Rents for these bonded spaces have quadrupled in some regions, as businesses seek predictable storage amid uncertainty.

5. Advantages and Some Limitations

5.1 Key Benefits

• Delayed cash outflow: No duties until goods are released for domestic sales.

• Inverted tariffs: When final products are taxed at a lower rate than components, manufacturers enjoy net savings.

• Added flexibility: Goods can be re-exported duty‑free, encouraging global expansion.

• Job growth: Prompt local employment from manufacturing activities in FTZs.

5.2 Challenges to Consider

• Higher operational costs: Zoning fees and warehouse charges can add up.

• Complex approval: Establishing a designated FTZ site or subzone often involves regulatory hurdles.

• Pedal to the metal: Businesses can delay payments, but they eventually owe duties—if not carefully managed, costs can pile up.

• Policy risk: A shift in trade law stripping FTZ benefits would hamper operations.

6. Policy and Market Context

6.1 Tariff Timeline

• The 1934 FTZ Act emerged to cushion Smoot-Hawley tariffs.

• In April 2025, the “Liberation Day” tariffs introduced blanket duties of up to 10%, with subsequent larger sectoral rates triggered delays and legal battles.

• The July 8 expiration of a 90-day tariff pause (set in April) triggered renewed FTZ interest when threats escalated to 40% tariffs on certain imports.

6.2 Rapid Zone Designation

Modern legislation like the Alternative Site Framework allows zone expansion in just 30 days—down from months—thus permitting quick adaptation during trade volatility.

7. Who Uses These Zones?

Virtually any importer qualifies—but the heaviest hitters are:

• Large manufacturers: Electronics, automotive parts, aerospace, pharmaceuticals.

• SMBs: Smaller firms storing or assembling niche products like cosmetics or sporting goods.

• Exporters: Companies shipping abroad who want to avoid duties entirely.

• Distributors: Those prioritizing inventory control or minimizing upfront tariffs.

Arizona has become a hub; FTZs there host employment from top firms like Apple, Intel, and Honeywell. Houston’s FTZ 84 similarly supports billions of trade.

8. Why This Matters to Americans

1. Consumer Prices

Deferment allows firms to delay cost increases or pass savings on to customers—even amid aggressive tariff hikes.

2. Economic Stability

By helping companies adjust without overhauling supply chains, FTZs keep retail shelves stocked and factories humming.

3. Jobs and Competitiveness

Local manufacturing jobs and investment are supported as companies retain operations amid global trade pressure.

4. Policy Flexibility

FTZs buffer supply chains, giving decision-makers time to negotiate or modify trade terms without immediate economic disruption.

9. Looking Ahead

• Growth continues: Expect more FTZ activation as policy uncertainties loom.

• Technology integration: Digital management systems will improve compliance and tracking.

• Rethinking national policy: As legal challenges to tariffs evolve, FTZ policy might be updated or challenged.

• Domestic manufacturing: More assembly inside FTZs may reinforce “Made in USA” branding—especially if combined with inverted tariff savings.

10. Summary of FTZ Benefits

Final Takeaway

Temporary tariff‑free zones—better known as FTZs—are strategic tools for American businesses seeking protection against unpredictable trade policy. With nearly 400 zones nationwide, companies small and large now have the flexibility to manage costs, mitigate tariff risk, and support domestic manufacturing. As global trade remains unpredictable, FTZs offer a critical buffer that promotes growth, employment, and economic stability.