Published on July 15, 2019
Foreign Trade Zone benefits are being used to combat the high cost of tariffs. As part of President Donald Trump’s “America First” economic policy, he has imposed new tariffs and could renounce free trade agreements. Tariffs are taxes the government can place on imported goods.
Tri-Link consults customers on the positive impact of the Free Trade Zone (FTZ) program. Because of the many benefits, companies and communities are becoming more interested in it.
Cities and counties are using FTZs to attract and retain employers, create and keep jobs, encourage economic growth, and boost international trade.
President Trump’s Impact on tariffs
President Trump is hoping to reduce the United States’ trade deficit by changing American trade policy from multilateral free trade agreements to bilateral trade deals.
He is trying to improve US production of metals. He hopes the tariffs will defeat what he believes are unfair trade practices.
For example, he recently implemented a 10% tariff on $200 billion worth of Chinese goods, in addition to earlier tariffs imposed on $50 billion worth of Chinese imports. He feels the taxes are having a “major effect” on the US economy. However, businesses are being forced to purchase higher-priced metals made in the US in an effort to avoid tariffs. That can lead to an increase in the price of goods.
How to Utilize Foreign Trade Zone Benefits
Free Trade Zones can be a huge cost savings for companies who rely on imported goods. Foreign and domestic merchandise can avoid being subjected to the customs laws of the United States by being brought into an FTZ. The Zones allow foreign and domestic companies to postpone paying customs duties. In some cases, duties can be avoided when imported goods are used as a component for a product that will eventually be exported.
While in an FTZ, foreign and domestic merchandise may be:
By utilizing the FTZ, companies can see an increase in cash flow, improve global logistics performance, lessen redundant or unnecessary logistics costs, and stay flexible.
Other direct benefits include the following:
- Improved inventory management
- Automated record keeping and document storage
- Increased visibility of the supply chain
- Improved company compliance
- Lessened U.S. regulatory agency requirements for re-export
Tri-Link can help companies take advantage of the benefits of FTZs. We can help you increase your profits through utilizing the cost-saving features of an FTZ.