FTZ’ine January 2025
January 6, 2025
T-Day
A lot can happen in two weeks.
But not usually this much.
Since January 20th a new President has been sworn in and signed over 75 Executive Orders. A 4-hour trade war was fought and won over immigration. Trade wars with Canada and Mexico lasted 4 days before a 30-day truce was negotiated in each. An escalation in the trade war with China was not resolved, and an additional 10% tariff went into effect this morning. The European Union has been told trade action with it is on the horizon. Staying ahead of the pace of news has been a struggle.
And it isn't just trade that's been affected. Announcement of a freeze in federal funding briefly cancelled U.S. programs favored by Grantees including Empowerment Zones (a $90M program) and Opportunity Zones (a $2.2B program). A buyout offer made to 2 million federal employees could have a direct impact on Grantees if staff members of the Foreign-Trade Zones Board decide to take the offer this week. Stay tuned.
Our thoughts and prayers go out to the families touched by the aircraft disasters in Washington and Philadelphia.
Top Story: Foreign-Trade Zones Adjust To Tariff Gyrations
The international trade community and Customs and Border Protection alike had to develop and install plans to implement substantial tariffs from USMCA partners Canada and Mexico.
The President also announced a new 10% tariff on all Chinese imports and eliminated de minimus entry for products of China.
While the Canadian and Mexican tariffs have been postponed, the new China tariffs were not resolved and went into effect this morning. The fast changes in the treatment of imports from major trading partners kept FTZs on their toes, and at their keyboards, over the weekend.
The ability to regulate the imposition of those fast changes also demonstrated the value of foreign-trade zones in the supply chain of U.S. manufacturers and distributors.
In addition to Canada and Mexico, the U.S. has diplomatic differences with China, Europe, the BRICS alliance (Brazil, Russia, India, China, and South Africa) and further trade disruptions with those countries could be coming as policy differences are worked out.
President Trump told the BBC late Sunday that tariffs “will definitely happen with the European Union” and could come “pretty soon.”
Great Britain has a more balanced trade relationship with the U.S., and the President said that he believed a deal could still be reached.
“The .U.K. is out of line. But I’m sure that one, I think, that one can be worked out,” Trump said, adding that he was “getting along very well” with U.K. Prime Minister Keir Starmer.
So perhaps there is at least one country out there that FTZs can cross off the danger list.
Tech Tip: Incorporating New China Tariffs For FTZs
U.S. Customs and Border Protection (CBP) issued a Federal Register Notice (FRN) implementing the new additional duties on products of China. The FRN won’t be published until tomorrow, but it took effect at midnight last night(!) Preview text of the FRN is available to guide importers on the new rules for handling imports from China. Important highlights for FTZs include:
Effective date: 12:01 a.m. Eastern Standard Time today, February 4, 2025.
HTS Codes: CBP defined a short range of HTS codes (9903.01.20-23) to be used to identify how the new tariff will apply to merchandise of China. Almost all merchandise of Chinese origin will require additional duties of 10%, on top of all other duties applicable to the merchandise.
Drawback: The additional tariffs on products of China are not eligible for drawback. Good thing you’re an FTZ.
Exclusion eligibility: There will be no exclusion process for the new China tariffs. See above.
FTZ Admission: All merchandise of China subject to the additional duties must, from today, be admitted in domestic or privileged-foreign status.
Existing Inventory: It appears that foreign status inventory held in an FTZ or bonded warehouse will be subject to the additional duties when entered into U.S. commerce. The only way to avoid the additional duties on Chinese merchandise currently in bonded status is to pay the duty on it now.
5-Day Rule: FTZs that elect to pay duty on their Chinese merchandise before the new tariffs take hold may need a waiver from their local Port.
Questions about how the new China tariffs affect your FTZ operation? Contact us at info@iscm.co.
Deeply Seeking Tariff Relief
The Chinese government seems to know something about chess.
On Inauguration Day, a small Chinese startup company released DeepSeek R1, a fully fledged AI model operating at a fraction of the cost of its American rivals. Within a week, its capability, and efficiency became clear.
U.S. stocks dropped sharply on the revelation, with U.S. chipmaker Nvidia losing $588.8 billion in market value — by far the most market value a stock has ever lost in a single day.
So impactful was the Chinese software release that world prices for natural gas, oil, and even Bitcoin tumbled.
China seemed to be sending a timed message that it is a different competitor, and trading partner, than the countries that have so far acquiesced to U.S. demands in the face of crushing tariffs on imports.
DeepSeek, a one-year-old startup, said it had spent just $5.6 million on computing power for its base model, compared with the hundreds of millions or billions of dollars US companies spend on their AI technologies.
That sent shockwaves through world markets and threatened the aura of invincibility surrounding America’s technology industry.
The stunning achievement from a relatively unknown AI startup becomes even more shocking when considering that the United States for years has worked to restrict the supply of high-power AI chips to China, citing national security concerns. That means DeepSeek was able to achieve its low-cost model on under-powered AI chips, reducing the effectiveness of U.S. export controls.
FTZs Prepare For Trade As A Hammer
A major disagreement between the US and Colombia on immigration threatened to spill over into a trade war. After refusing two U.S. military aircraft carrying Colombians deported from the United States, the Trump administration responded by threatening to slap punitive tariffs on Colombian exports to the US.
An intense but brief spat erupted and subsided by nightfall after President Gustavo Petro agreed to allow US military flights carrying deported migrants to land in the Andean country.
One week later President Trump signed Executive Orders to put a 25 percent tariff on products from Canada and Mexico, claiming that the countries were allowing “mass numbers of people and fentanyl” to come to the United States.
Like Colombia, Canada and Mexico responded to the threat of tariffs in ways that suggest the negotiating tactic is working. As the method produces more results, international traders will need to prepare for tariffs to be used more often to achieve objectives that may or may not be trade related.
Mexican President Claudia Sheinbaum posted on social media that Mexico will immediately reinforce its northern border with 10,000 members of the country's National Guard to address drug trafficking from Mexico into the U.S., particularly fentanyl.
She wrote on X after a call with President Trump. “We had a good conversation with President Trump with great respect for our relationship and sovereignty,” she said.
She explained that, as a result of their discussion, Mexico would send 10,000 National Guard troops to its northern border to “prevent drug trafficking from Mexico to the United States”.
Sheinbaum added that the US was, in return, working to prevent the trafficking of high-powered firearms to Mexico, which has long fed cartel activity in the country.
Following two calls with President Trump yesterday, Canadian Prime Minister Justin Trudeau also announced on X that “proposed tariffs will be paused for at least 30 days while we work together”.
The Prime Minister further wrote that Canada would be spending $1.3 billion on a plan to reinforce its border with new helicopters, technology and personnel, as well as additional resources to stop the flow of fentanyl.
The Canadian government would name a “fentanyl czar”, list Mexican cartels as terrorist groups, and launch a “Canada-US Joint Strike Force to combat organized crime, fentanyl and money laundering”.
In his Senate confirmation hearing, Treasury Secretary Scott Bessent listed three main reasons that the Trump administration might deploy tariffs. Some tariffs could be aimed at remedying unfair trade practices, while others could raise revenue for the federal budget.
He added that Mr. Trump, as a skilled negotiator, had “added a third use of tariffs.” Tariffs could be used for negotiations, including for Mexico on the fentanyl crisis, he said.
Foreign-trade zones are no strangers to unfair trade practices. Using tariffs to raise revenue would likely involve Congressional action, giving international supply chains time to adjust to legislative action as it is debated.
However using them as a negotiating tactic could leave the trade unprepared to when they are implemented quickly to force a position.
Security Lines At The Capitol Just Got Longer
Shortly into the new year a Massachusetts man was found to be carrying a gun after attending a tour of the U.S. Capitol.
The man went through a Capitol Police check point before entering the Capitol Visitor Center. The weapon triggered the magnetometer alarm and "an officer performed a secondary hand search, and the man was let into the building," according to a statement from U.S. Capitol Police.
The officer who performed the hand search at the Visitor Center "is suspended while the USCP's Office of Professional Responsibility is conducting an administrative investigation into the officer's performance of that search."
Better leave some extra time on your next visit. Capitol security screenings are likely to be more deliberate and consume more schedule for the foreseeable future.
Police in Carlisle, Massachusetts alerted authorities that a man with a gun who had expressed suicidal thoughts on social media was headed to Washington.
The U.S. Secret Service and Washington, D.C. Metropolitan Police found the man in a Washington hotel and interviewed him, sources said. They searched for a gun but found no weapon, and no further action was taken at the time.
Capitol Police were then alerted to his presence after he got past the checkpoint. They located him outside the Library of Congress, after he had completed his tour of Congress. This time he had a 9mm handgun in his waistband, law enforcement sources said.
Authorities said the suspect was arrested for "Unlawful Activities, Carrying a Pistol Without a License, Possession of an Unregistered Firearm, Unlawful Possession of Ammunition, and Resisting Arrest." the Capitol Police said in a statement. "A full review of this incident has already been ordered, as well as mandatory refresher training on security screening, so this never happens again,"
Which probably means you will need to leave even more time for security on your next trip to the Capitol.
FTZ Staff Activity
- FTZ Board Staff processed a processed a Termination (S-223-2024) in FTZ 84 on behalf of Houston Heavy Machinery, Cypress, TX on December 18, 2024
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-224-2024) subject to the activation limit of FTZ 247 on behalf of Cummins Inc., Irvine, PA on December 20, 2024
- FTZ Board Staff processed a Traditional Site Framework Minor Boundary Modification Application (S-225-2024) in FTZ 146A on behalf of North America Lighting, Inc., Salem, IL on December 23, 2024
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-226-2024) subject to the activation limit of FTZ 55 on behalf of Century Arms, Inc., Georgia, VT on December 29, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-227-2024) in FTZ 230 on behalf of Jockey International, Inc., Cooleemee, NC on December 30, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-228-2024) in FTZ 94 on behalf of Lopezadri Forwarding, LLC, Laredo, TX on December 30, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-229-2024) in FTZ 94 on behalf of Laredo Moving and Storage, Inc., Laredo, TX on December 31, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-230-2024) in FTZ 94 on behalf of Proactive Group of Companies MX, Inc., Laredo, TX on December 31, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-1-2025) in FTZ 202 on behalf of ForwarDepot, Walnut, CA on January 3, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-2-2025) in FTZ 281 on behalf of Agrilac dba Codexing, Miami, FL on January 6, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-3-2025) in FTZ 49Z on behalf of Sanofi US Services, Inc., Ridgefield, NJ on January 6, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-4-2025) in FTZ 86 on behalf of Holman Distribution Center of Washington Inc. dba Holman Logistics, Fredrickson, WA on January 8, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-5-2025) in FTZ 281 on behalf of Miami International Freight Solutions, Hialeah, FL on January 13, 2025
- FTZ Board Staff processed a processed a Termination (S-6-2025) in FTZ 32 on behalf of Skywire Communications, Miami, FL on January 13, 2025
- FTZ Board Staff processed a processed a Termination (S-7-2025) in FTZ 32F on behalf of Taylor Sudden Service Inc., Hialeah, FL on January 13, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-8-2025) in FTZ 86J on behalf of Atlas Columbia Warehouse, Tacoma, WA on January 14, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-9-2025) in FTZ 45J on behalf of SSI Shredding Services, Inc., Portland, Wilsonville, WA on January 14, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-10-2025) in FTZ 22AG on behalf of FNS, Inc., Chicago, IL on January 21, 2025
Foreign-Trade Zone Board Activity
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- Arvato USA, LLC submitted a notification requesting production activity for camera bundles within Foreign-Trade Zone 29 in Louisville, Kentucky. MORE
- Century Arms, Inc. submitted an application to operate its facilities in Georgia, Vermont as a subzone of Foreign-Trade Zone 55. MORE
- Sanofi US Services Inc. submitted a notification requesting production activity for additional components of pharmaceutical products within Foreign-Trade Zone 49 in Ridgefield, New Jersey. MORE
- Unimacts Company submitted a notification requesting production activity for steel products within Foreign-Trade Zone 265 in Conroe, Texas. MORE
- Merck, Sharp & Dohme LLC submitted a notification requesting production activity for additional components of pharmaceutical products for research and development within Foreign-Trade Zone 49Y in Rahway, New Jersey. MORE
- True Manufacturing Co., Inc. received authorization to operate its facilities as Subzone G of Foreign-Trade Zone 102 in O'Fallon and Mexico, Missouri. MORE
- The Port of Port Angeles received approval to establish new Foreign-Trade Zone 303 under the Alternative Site Framework with a service area of Clallum County, Washington. MORE
- Merck, Sharp & Dohme LLC received authorization of production activity for additional components of pharmaceutical products for research and development in Foreign-Trade Zone 49Y in Rahway, New Jersey. MORE
- Zebra Technologies Corporation submitted a notification requesting production activity for computer printing products within Foreign-Trade Zone 41 in Kenosha, Wisconsin. MORE
- Kawasaki Motors Manufacturing Corp., U.S.A. received authorization of production activity for additional components of all-terrain vehicles in Foreign-Trade Zone 59A in Lincoln, Nebraska. MORE
- Robert Bosch Semiconductor LLC received authorization of production activity for silicon carbide wafers in Foreign-Trade Zone 143 in Roseville, California. MORE
- Renaissance Lakewood, LLC. received authorization of production activity for prescription nasal spray products in Foreign-Trade Zone 235 in Lakewood, New Jersey. MORE
- Wurth Electronics Midcom, Inc. received authorization to operate its facilities as Subzone A of Foreign-Trade Zone 220 in Watertown, South Dakota. MORE
- Premium Guard, Inc. received authorization to operate its facilities as Subzone A of Foreign-Trade Zone 240 in Weirton, West Virginia. MORE
T-Day:
A lot can happen in two weeks.
But not usually this much.
Since January 20th a new President has been sworn in and signed over 75 Executive Orders. A 4-hour trade war was fought and won over immigration. Trade wars with Canada and Mexico lasted 4 days before a 30-day truce was negotiated in each. An escalation in the trade war with China was not resolved, and an additional 10% tariff went into effect this morning. The European Union has been told trade action with it is on the horizon. Staying ahead of the pace of news has been a struggle.
And it isn’t just trade that’s been affected. Announcement of a freeze in federal funding briefly cancelled U.S. programs favored by Grantees including Empowerment Zones (a $90M program) and Opportunity Zones (a $2.2B program). A buyout offer made to 2 million federal employees could have a direct impact on Grantees if staff members of the Foreign-Trade Zones Board decide to take the offer this week. Stay tuned.
Our thoughts and prayers go out to the families touched by the aircraft disasters in Washington and Philadelphia.
