Manufacturers: 3 Tariff Mitigation Strategies (FTZs, Bonded Warehouses & HTS)

After researching trade regulations and industry approaches, I wanted to share what manufacturers should know about using FTZs, bonded warehouses, and HTS strategies in today's high-tariff environment:

1. Foreign-Trade Zones (FTZs)

Designated areas where goods receive the same customs treatment as if they were outside the US. It is ideal for manufacturers with high-value imports facing substantial duties or those focused on re-exports.

• Duty deferral until goods enter U.S. commerce improves cash flow
• No duties on goods re-exported internationally
• Particularly valuable when finished goods have lower duty rates than components
• Several automotive manufacturers are expanding FTZ usage as trade policies evolve

2. Bonded Warehouses

Secure facilities under CBP supervision where imported merchandise can be stored without paying duties. This method is best implemented for seasonal inventory or when a faster setup than FTZs is needed.

• Generally faster setup than establishing FTZs
• More limited manufacturing capabilities (primarily labeling/repackaging)
• Ideal for shorter-term storage needs vs. long-term strategy
• Popular in pharmaceuticals for temperature-sensitive products

3. Harmonized Tariff Schedule (HTS) Classification Strategies

The system used to classify imported goods and determine applicable duty rates is critical during product development and sourcing decisions, potentially reducing the tariff burden.

• Minor product modifications can qualify for more favorable HTS codes
• Utilizing binding rulings when classification is uncertain
• Regular audits can identify optimization opportunities
• Always ensure classifications are accurate and defensible

I'm not an expert in this area, but found this research valuable. Has anyone implemented these strategies recently? What was your experience?