FTZ’ine July 2025

Careful What You Wish For

You can add possible U.S. involvement in the war in the Middle East to the list of factors that drove economic uncertainty in June. With more reciprocal tariffs scheduled to implement soon, even the Federal Reserve said that they could not accurately predict the economic outcome of all the factors in play. Thus the central bank decided to leave U.S. interest rates unchanged. Much to the chagrin of a certain U.S. President.

With the July 9th deadline for imposition of additional reciprocal tariff rates coming up fast, country-by-country negotiations are not going well. Foreign-trade zones will need to brace for impact.

FTZs and other importers are struggling to manage their bond amounts for CBP. In addition to the looming reciprocal tariff increases, the reduction in China tariffs (to 55%!) will eventually expire, which is yet another reason U.S. Customs bond requirements could skyrocket.

Federal Courts have temporarily stayed the ruling of the U.S. Court of International Trade that would eliminate IEEPA tariffs and the foreign-trade zone requirement that all merchandise be admitted in PF status. However, the Administration seems to be preparing an alternate way to collect import tariffs that the trade community, including foreign-trade zones, may find even more punishing.

Top Story: What Lies Ahead For FTZs After IEEPA?

We are still at least months away from finding out if the ruling of the U.S. Court of International Trade to invalidate the IEEPA tariffs will stand. An attempt by one of the plaintiffs to fast track a ruling from the Supreme Court failed last week, so we have to wait for the case to make its way through at least one lower court first.

In the meantime, it appears that the administration may be preparing to pivot to a different strategy for invoking tariffs that can be used for raising revenue as well as inducing the country's trade partners to negotiate a better environment for US exports. That has implications that foreign-trade zones will want to start planning for.

US Customs is about to implement changes to ACE that will allow filers to include up to 32 different tariff codes to each item of import. That coincides with a series of Section 232 investigations on semiconductors, pharmaceutical products, and copper. A possible replacement for the IEEPA tariffs would be to dramatically broaden the scope of derivative products also subject to Section 232 additional tariffs.

So one possible scenario is that importers will have to separately declare and value the steel, aluminum, semiconductor, pharmaceutical, and copper content of each item they import. While the changes to ACE have made this technically possible, many foreign trade zones struggled with the addition of multiple tariffs to their items when the IEEPA tariffs were first introduced in April. Adding even more tariff lines to each entry summary line would only exacerbate the filing problems zones have now. Some FTZ software providers are still struggling to provide efficient functionality that allows addition of the codes and values.

On top of the technical challenge of reporting the separate values, most supply chains don't currently break out the value of such materials, or list their countries of origin. Under the current Section 232 guidelines, if the source of steel and aluminum in a derivative product is unknown, CBP assumes an origin of Russia and assigns a 200% duty rate. Therefore if Section 232 will be used by the administration to replace the IEEPA tariffs, either after a ruling by the Supreme Court, or preemptively before a negative determination by the court, the trade community will need to work deep into its international supply chains to identify the applicable value and origin that applies to each Section 232 category.

If such Section 232 derivative tariffs are added on the short timeline we saw with the IEEPA tariffs, importers could be faced with dramatic increases and duty liability until they are able to make specific declarations with respect to value and country of origin for Section 232 categories. It may make sense for foreign-trade zones to start having conversations with their suppliers now on how such value and origin information can be developed.

Tech Tip: CBP Expands Available Tariff Code Slots To 32

This coming weekend US Customs will deploy changes in the Automated Commercial Environment (ACE) Production environment that will increase the number of Harmonized Tariff Schedule (HTS) numbers allowed per entry summary line. This enhancement will enable filers to include up to 32 HTS numbers on one entry summary line, including for Reconciliation and Drawback entry summaries.

The current limit is 8 HTS numbers per entry summary line, which is more than enough for the current list of derivative products that an item might be subject to. Foreign-trade zones and other importers have struggled to add the additional HTS codes correctly, and in the correct order, to avoid rejection of entry summaries. This announcement by US Customs seems to signal that the application of additional derivative HTS codes is in the works. FTZ operators will want to review their procedures and supporting documentation to make sure they are ready to implement additional derivative HTS assignments as they are made.

Changes have already been made in the ACE certification environment to allow for software testing.

Questions about how the changes to the number of tariff lines permitted for an item will affect your FTZ? Contact us at info@iscm.co.

Muted Economic Signals But Still No Rate Cuts As Tariffs Set To Rise

Tariffs continue to play a significant and perhaps unintended role in the budget battles in Washington. While Congress and the Trump administration scratch and claw for ways to fill a trillion-dollar budget gap, lowering interest payments on the national debt won't be an option in the near term.

The United States Federal Reserve announced this week that uncertainty about the impact of tariffs on inflation will put interest rate reductions on the back burner for now.

“We [the Federal Reserve] aren’t commenting on tariffs,” Powell said. “Our job is keeping inflation under control, and when policies have short- and medium-term, meaningful implications, then inflation becomes our job.”

“All professional forecasters I know of … expect a meaningful increase in inflation over the course of this year,” Powell said, explaining the Fed’s reluctance to cut rates while major aspects of Trump’s trade policy take hold in the U.S. economy.

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said in prepared remarks on Tuesday before the House Committee on Financial Services.

Powell said the central bank needs more time to see if rising tariffs drive inflation higher before considering lowering rates. He also expects the Fed to get a lot of information about the inflation effects of tariffs in the next couple of months, anticipating that he will see more tariff impacts on the data starting with readings from June.

The Federal Reserve Chairman seems to agree that other economic indicators in the United states are softening as would be expected when the central bank is ready to lower interest rates. Jobs data released by the Department of Commerce during the month showed a resilient but softening pace of hiring in the United States.

The World Bank cited “a substantial rise in trade barriers’’ as the reason for a downward revision of its prediction for the growth rate of the US economy to 1.4%. That is half as fast as the 2.8% growth rate in 2024, and marked a downgrade from its 2.3% January growth forecast.

The World Bank also chopped 0.4 percentage points off its forecast for global growth this year. It now expects the world economy to expand just 2.3% in 2025, down from 2.8% in 2024.

The Chinese economy is forecast to see growth slow from 5% in 2024 to 4.5% this year and 4% next. The world’s second-largest economy has been hobbled by U.S. tariffs, by the collapse of its real estate market and by an aging workforce.

The World Bank expects the 20 European countries that share the euro currency to collectively grow just 0.7% this year, down from an already lackluster 0.9% in 2024.

India is once again expected to the be world’s fastest-growing major economy, expanding at a 6.3% clip this year. But that’s down from 6.5% in 2024 and from the 6.7% the bank had forecast for 2025 in January. In Japan, economic growth is expected to accelerate this year – but only from 0.2% in 2024 to a sluggish 0.7% this year, well short of the 1.2% the World Bank had forecast in January.

Foreign-Trade Zones Bracing For Board Application Updates

If you have filed an application with the U.S. Foreign-Trade Zones Board lately, you know that requests are being made for additional information beyond that which is currently requested in the application templates available through the board's website. Requests for further information with respect to Minor Boundary Modification (MBM) applications and Production Notifications has been a bit uneven however, and to date it has not been easy to predict if a particular application will receive requests for additional information or not.

The requests for additional information have also had an impact on application timelines. International traders have come to expect staff action to be completed well within the published guidelines. Staff reductions have surely contributed to the extended processing times that most applications are currently experiencing, but the addition of requests for information not included in the application templates has also led to delays. Those application templates are now being revised to help standardize the requests for additional information. Since the templates are not described in the regulations, they can be changed without public comment so the timing and exact content of the changes is unclear.

FTZs Struggle With Bond Amount Management

Fluctuations in US tariff rates have led to significant changes in the amounts of importer bonds that traders must keep on file with U.S. Customs. The cash value of these bonds is typically set at 10% of annual duties paid, and the National Finance Center (NFC) of U.S. Customs regularly evaluates every importer bond to make sure the amount is consistent with this standard.

However, with the amount of duties owed constantly in flux, it has been difficult for importers to predict their liability, leading to the dreaded ‘Insufficiency Notice’.

The Insufficiency Notices are problematic for traders because U.S. Customs then sets a hard date for revocation of import privileges unless a new bond at a higher amount is purchased. At the same time, bond providers discourage frequent increases in bond amounts. This place is foreign-trade zones in a difficult position of trying to forecast rapidly changing tariff rates.

There are 5 components to the U.S. Customs calculation for Activity Code 1 (importer) bonds. The first and (normally) largest component is 10% of duties, taxes, and fees paid in the previous 12 months. To that, CBP adds 10% of unpaid bills not protested and less than 210 days old, or bills protested. Then delinquent bills not protested and over 210 days or denied protests are added, as well as dollars for unpaid debit vouchers. Finally CBP adds any bills paid by the surety on behalf of the importer.

It is the first component of duties that have been the most volatile for foreign trade zones. The see-saw changes in the Section 301 tariffs on goods from China for instance, created dramatically higher bond liabilities for some importers, even though their volume of import business may have actually been declining. Importers face the same dilemma now because the reciprocal tariffs now in effect are expected to significantly increase in just a few weeks.

Requested bond amounts are rounded up by increments of $10,000 up to $100,000 and then by increments of $100,000.

FTZ Staff Activity

FTZ Board Staff processed a processed a Termination (S-129-2025) in FTZ 61J on behalf of Pepsi Cola Manufacturing International Ltd., Ponce, PR on May 22, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-130-2025) in FTZ 22 on behalf of DSV Solutions, LLC, Aurora, IL on May 27, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-131-2025) in FTZ 115 on behalf of Port of Beaumont Navigation District of Jefferson County, TX, Beaumont, TX on May 27, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-132-2025) in FTZ 50 on behalf of Starship Logistics, LLC on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-133-2025) in FTZ 32 on behalf of Audio Video Export, Miami, FL on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-134-2025) in FTZ 32 on behalf of Global Food Corp, Medley, FL on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-135-2025) in FTZ 32 on behalf of International Cruise Food & Hotel Suppliers, Inc., Miami, FL on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-136-2025) in FTZ 32 on behalf of SurgiMed Corporation, Doral, FL on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-137-2025) in FTZ 176 on behalf of Meiborg Warehousing, Rockford, IL on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-138-2025) in FTZ 176 on behalf of J.A. Logistics, Inc., McHenry, IL on May 29 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-139-2025) in FTZ 176 on behalf of Coilcraft, Inc. Princeton, IL on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-140-2025) in FTZ 255B on behalf of Black & Decker (U.S.), Inc., Hagerstown, MD on May 29, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-141-2025) in FTZ 138I on behalf of Intel Corporation, New Albany, OH on June 2, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-142-2025) in FTZ 77L on behalf of UNIS, LLC DBA UNIS Fulfillment, LLC, Memphis, TN on June 2, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-143-2025) in FTZ 94 on behalf of Zayro International Forwarders, LLC, Laredo, TX on June 2, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-144-2025) in FTZ 272 on behalf of UNIS, LLC DBA UNIS Fulfillment, LLC, Memphis, TN on June 2, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-145-2025) in FTZ 153 on behalf of Domo Manufacturing and Contracting, LLC, San Diego, CA on June 2, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-146-2025) in FTZ 41T on behalf of Hospira, Inc. (a Pfizer, Inc. Company), Pleasant Prairie, WI on June 2, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-147-2025) in FTZ 18S on behalf of Quanergy Solutions, Inc. on June 2, 2025
FTZ Board Staff processed a processed a TSF Subzone subject to the activation limits of the Grantee (S-148-2025) in FTZ 196 on behalf of Radix Group International dba DHL Global Forwarding, Fort Worth, TX in June, 2025
FTZ Board Staff processed a processed a Termination (S-149-2025) in FTZ 43B on behalf of Mead Johnson, Grand Rapids, MI on June 3, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-150-2025) in FTZ 22AH on behalf of JS International, Inc., Bolingbrook, IL on June 3, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-151-2025) in FTZ 70 on behalf of Commercial Freight Services, Inc., Romulus, MI on June 3, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-152-2025) in FTZ 22 on behalf of North America Stevedoring Co. LLC, Chicago, IL on June 4, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-153-2025) in FTZ 57 on behalf of Eli Lilly and Company, Concord, NC on June 4, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-154-2025) in FTZ 50 on behalf of Trojan Battery Company LLC, Santa Fe Springs, CA on June 4, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-155-2025) in FTZ 84 on behalf of Packwell, Inc., La Porte, TX on June 5, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-156-2025) in FTZ 30 on behalf of Varex Imaging Corporation, Salt Lake City, UT on June 5, 2025
FTZ Board Staff processed a processed a Minor Boundary Modification (S-157-2025) in FTZ 30 on behalf of Stadler Rail AG, Salt Lake City, UT on June 5, 2025

Foreign-Trade Zone Board Activity

- Radix Group Int'l dba DHL Global Forwarding submitted an application to operate its two locations in Fort Worth, Texas facility as a subzone of Foreign-Trade Zone 196. MORE
- Air Venturi, Ltd. submitted a notification of proposed production activity for air guns and pressure tanks within Foreign-Trade Zone 40N in Solon, Ohio. MORE
- Phillips 66 Company submitted an application to expand Foreign-Trade Zone 49E to add a new site in Linden, New Jersey. MORE
- Michaels Stores Procurement Company, Inc. submitted an application to operate its Hazleton, Pennsylvania facility as a subzone of Foreign-Trade Zone 24. MORE
- A&K Railroad Materials, Inc. submitted an application to operate its Eagle Lake, Texas facility as a subzone of Foreign-Trade Zone 155. MORE
- Robert Bosch Semiconductor LLC received approval to operate their Roseville, California facilities as Foreign-Trade Zone 143F. MORE
- Zebra Technologies Corporation received authorization of proposed production activity for computer printing products within Foreign-Trade Zone 41 in Kenosha, Wisconsin MORE

Careful What You Wish For:

With the July 9th deadline for imposition of additional reciprocal tariff rates coming up fast, country-by-country negotiations are not going well. Foreign-trade zones will need to brace for impact.
FTZs and other importers are struggling to manage their bond amounts for CBP. In addition to the looming reciprocal tariff increases, the reduction in China tariffs (to 55%!) will eventually expire, which is yet another reason U.S. Customs bond requirements could skyrocket.