Data on utilization of foreign-trade zones in 2021 shows that FTZs are supporting an increase in U.S.-based operations as companies continue to reshore production from foreign sources. FTZs are one of a number of proven and legitimate ways to escape or limit the impact of import tariffs and can offer other logistical and financial benefits as well.
According to the FTZ Board’s annual report to Congress released Aug. 29, the value of merchandise received into U.S. FTZs increased by a third in 2021, from $625 billion to $836 billion. More than half of this total ($465.8 billion) was destined for production operations, with the remainder ($369.8 billion) for warehouse or distribution operations. The largest industries accounting for FTZ production activity included pharmaceuticals, oil refining, automotive, electronics, and machinery/equipment.
Additionally, there were significant increases in the dollar value and percentage of domestic inputs used in FTZs, where domestic materials can be combined with imported materials to make different finished products. The value of domestic inputs jumped 42.5 percent for production operations and 54.2 percent for warehouse and distribution operations, while the percentage of domestic inputs to total inputs rose from 74 percent to 77 percent for production operations and from 42 percent to 49 percent for warehouse and distribution operations. These increases demonstrate how FTZs support U.S.-based operations as companies are re-shoring their activity to the U.S.
The report also points out that with increased zone activity, the value of exports from FTZs rose as well, increasing 31.2 percent to $123.6 billion. This figure does not include certain indirect exports involving FTZ merchandise that undergoes further processing in the U.S. at non-FTZ sites prior to export.
For more information on how FTZs can benefit your business, please contact attorney Scott Taylor at (212) 549-0153 or via email.
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