Foreign-Trade Zone (FTZ)

A Foreign-Trade Zone is a designated US area treated as outside CBP territory for duty purposes — goods can be admitted, stored, manufactured, or assembled there with duty deferred, reduced, or eliminated. Duty is paid only when goods leave the zone for US consumption (and re-exports pay none), and manufacturers can often choose the lower duty rate between the components and the finished product ('inverted tariff' benefit). Example: a manufacturer imports high-duty parts into an FTZ, assembles a lower-duty finished product, and pays duty at the finished-good rate. It matters because it defers cash outlay and can legally cut the effective duty on manufacturing inputs.