GlossaryEN1 min readUpdated: Jun 25, 2026

Foreign-Trade Zone (FTZ)

As of June 2026 — A Foreign-Trade Zone (FTZ) is a secure area supervised by U.S.

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Last updated: 25 June 2026Published: 24 June 2026

Source: U.S. Foreign-Trade Zones Act of 1934 (19 U.S.C. §§ 81a–81u); 19 CFR Part 146 incl. § 146.41 (Privileged Foreign status); U.S. CBP "About Foreign-Trade Zones"; U.S. Supreme Court IEEPA tariff ruling (20 February 2026); Section 122 Trade Act of 1974. Stand: Juni 2026

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Definition & Explanation

As of June 2026 — A Foreign-Trade Zone (FTZ) is a secure area supervised by U.S. Customs and Border Protection (CBP) that, for duty purposes, is treated as outside U.S. customs territory even though it is physically located in the United States. The legal basis is the Foreign-Trade Zones Act of 1934 (19 U.S.C. §§ 81a–81u); oversight lies with the Foreign-Trade Zones Board of the Department of Commerce and CBP (19 CFR Part 146). Goods admitted to a zone trigger duty only when they enter U.S. commerce (duty deferral); if they are re-exported or become scrap or yield loss, the duty is eliminated entirely. Through the "inverted tariff" benefit a processor may pay the lower rate of the finished product, and weekly entry filing reduces the Merchandise Processing Fee. Crucial in the context of the Trump tariffs: goods subject to Section 232, Section 301, IEEPA (until February 2026) or the Section 122 global tariff in force since then must, since 9 April 2025, be admitted in "Privileged Foreign status" (19 CFR 146.41) — the additional tariff is locked in at admission and becomes payable upon withdrawal, so an FTZ cannot avoid these duties (and the inverted-tariff benefit does not apply to them). After the U.S. Supreme Court ruled on 20 February 2026 that the IEEPA tariffs were unlawful, the administration replaced them with a Section 122 global tariff (initially 10%, with an announced increase to 15%; statutorily capped at 15% and 150 days), which likewise requires Privileged Foreign status. Not to be confused with a bonded warehouse, which does not permit manufacturing. Related: Section 232, Section 122, tariff stacking, HTS, customs value, duty drawback.