FTZ’ine February 2025
February 4, 2025
Time To Push Your Head Back On
International traders know just what it feels like to be a Rock ‘Em Sock ‘Em Robot.
Last month was just one punch after another. First they had to add 10% to China. Then 25% on steel and aluminum, including derivatives. Now 25% on everything from Canada and Mexico. Plus another 10% on China. 25% on Europe in four weeks. This fall maybe copper and copper derivatives.
International traders spent the month dealing with one additional tariff after another. Including the new ones that go into effect today. Most items imported from Canada and Mexico haven’t had a U.S. tariff applied in 30 years. It opens a whole new category of merchandise, and merchandise traders, that will benefit from use of the foreign-trade zones program.
There’s no time to waste. Push your head back on and keep swinging.
Top Story: Tariff Onslaught Keeps Foreign-Trade Zones Busy
President Trump imposed 25% tariffs on goods of Canada and Mexico starting this morning. Canadian energy imports have a reduced rate of 10%; the IEEPA tariff rate on imports from China also increased by that amount, to 20%.
U.S. Customs and Border Protection has just published instructions for payment of the new tariffs. Under NAFTA and then USMCA, most imports from those countries have been duty and MPF-free since 1994.
That means the 25% duty will be a shock to many supply chains, especially those with heavy cross-border dependency such as the auto industry. Such goods haven’t had an FTZ benefit for decades, but may need access to the program now.
And just as the foreign-trade zone industry figures out how to assimilate the tariffs that go into effect today, next month promises more new tariff announcements. “The April Second Reciprocal Tariff date will remain in full force and effect,” the President said as part of a social media post.
Mexico and Canada initially responded to the tariff announcement by emphasizing their existing efforts to address the fentanyl and immigration issues. Canada created a fentanyl czar, and Mexico sent 10,000 members of its National Guard to its border with the United States.
Now each country is mainly talking about retaliatory measures, which could signal a protracted disruption to cross-border trade.
Mexican President Claudia Sheinbaum said "We have a plan B, C, D," during a news conference yesterday on the 25 percent tariffs.
Canadian Prime Minister Justin Trudeau said “If the United States goes ahead and imposes tariffs, we already shared the details of our plan. We have $30 billion worth of U.S. products that will be subject to tariffs. And $125 billion of tariffs that will be applied three weeks later. But we don’t want to be in that position.”
The 25% tariffs on Mexico and Canada would amount to a total tax increase on the U.S. public of somewhere between $120 billion to $225 billion annually, according to Jacob Jensen, a trade policy analyst at the American Action Forum. The additional China tariffs could cost consumers up to $25 billion.
The President indicated last week that European countries would also face a 25% tariff as part of new reciprocal tariffs to take effect in April. That may include separate tariffs on autos, computer chips and pharmaceutical drugs that would be levied in addition to the reciprocal tariffs.
Tech Tip: CBP Confirms PF Handling For New Tariffs
Last night, CBP distributed instructions through the Cargo Systems Messaging Service for the new tariffs on our USMCA partners. Customs issued CSMS # 64297449 (Canada) CSMS # 64297292 (Mexico) with technical guidance on applying the new duties on the imports of merchandise with Canadian and Mexican origin.
The 25% tariff (10% on energy imports from Canada) went into effect at midnight.
CBP established new tariff codes to identify products on which the tariffs are due. The numbers are easily confused though.
9903.01.01 applies to imports of articles that are products of Mexico, except for donations, informational materials, and products in baggage accompanying passengers.
9903.01.10 applies to imports of articles that are products of Canada, except for donations, informational materials, and products in baggage accompanying passengers. These codes both carry tariffs of 25%.
9903.01.13 applies a 10% tariff to imports of energy or energy resources of Canada, including crude oil, natural gas, and refined petroleum products.
No drawback, exemptions, or exclusions are available with respect to these additional duties, however duty-free de minimus entry rules remain in effect for both countries. Any merchandise subject to these tariffs and admitted into an FTZ must be admitted in privileged (PF) status.
CBP also clarified this month that the 10% IEEPA additional tariffs will be based on the date PF status is elected, not the date of entry. Therefore the new 10% and 20% duties on articles of China and Hong Kong may be reduced depending on the date that privileged-foreign status was elected for the merchandise.
Questions about how the foreign-trade zones program can help companies avoid the new tariffs? Contact us at info@iscm.co.
Key Trade Appointees Confirmed
The Senate confirmed New York financier Howard Lutnick as Commerce Secretary last month, putting in place a staunch supporter of President Trump’s trade policies.
Secretary Lutnick, who was CEO at the investment firm Cantor Fitzgerald, will oversee 50,000 employees and likely spend a lot of time managing the President’s plans to impose import taxes on U.S. trading partners.
The Senate also confirmed Jamieson Greer, a veteran of President Trump’s first-term economic battles with China, to be America’s top trade negotiator.
As the United States Trade Representative, Greer will work with Secretary Lutnick to orchestrate an aggressive trade agenda.
Greer’s nomination cleared the Senate by a 56-43 vote. The Senate vote to confirm Lutnick was 51-45.
Greer, a former Air Force lawyer, was chief of staff to the President’s first Trade Representative, Robert Lighthizer. In that position, Greer was involved in talks with China at the start a time when the world’s two largest economies were hitting each other’s products with tariffs.
Greer helped negotiate the US-Mexico-Canada Agreement (USMCA), and worked with Democrats in Congress to get it approved. But many Democrats voted against Greer’s nomination to protest the current approach to trade.
Senate Majority Leader John Thune, R-S.D., called Greer “admirably qualified” for the job and said he hopes the Trump administration will prioritize the trade needs of America’s farmers.
“I look forward to a close partnership between the administration and Congress in the coming months and years as we work to expand opportunities for American producers,” Thune said.
At his confirmation hearing last month, Lutnick dismissed as “nonsense’’ the idea that tariffs contribute to inflation. He expressed support for deploying across-the-board tariffs ”country by country’’ to strong-arm other countries into lowering barriers to American exports.
Lutnick was CEO at Cantor Fitzgerald when its offices were hit in the Sept. 11, 2001, attack on the World Trade Center. The firm lost two-thirds of its employees — 658 people — that day, including Lutnick’s brother. Howard Lutnick led the firm’s recovery and is a member of the Board of Directors of the National September 11 Memorial & Museum.
U.S. FTZ Dismay As China de minimus Ban Lasts Only 3 Days
In a February 1st Executive Order, President Trump ended the de minimis exemption for Chinese low-value packages that had previously entered duty free.
The White House gave just three days for the policy to take effect on February 4th. On February 7th, the de minimis parcel ban was paused indefinitely.
It turns out the U.S. Postal Service has no system in place to collect tariffs or remit them to the federal government.
The initial change caused the USPS to temporarily stop accepting packages from China and Hong Kong. That made packages stack up at ports of entry across the country, including over one million packages at New York's John F. Kennedy International Airport alone.
The number of shipments entering the U.S. through the de minimis tax-free channel has exploded in recent years, reaching nearly 1.4 billion packages last year, due largely to online shopping. More than 90% of all packages coming into the U.S. now enter via de minimis. Of those, about 60% come from China, led by direct-to-consumer retailers such as Temu and Shein.
A Reuters investigation last year detailed how traffickers often route fentanyl precursor chemicals through the United States by exploiting the de minimis rule.
Logistics experts said it was impossible for major parcel carriers, e-commerce platforms, the U.S. Postal Service and U.S. Customs and Border Protection (CBP) to begin collecting tariffs on previously exempt goods, especially with millions of de minimis packages already en route from China.
"You just can't snap your fingers….it doesn't work that way," said former senior CBP official John Leonard, who retired from the agency in 2024.
Leonard said these types of major changes have traditionally taken months to implement, and they involve close collaboration between CBP and the private sector.
U.S. Representative Rosa DeLauro, a Connecticut Democrat, supports ending de minimis exemptions entirely for all countries, not just China. But she said the surprise order caught the shipping industry off guard.
"You have to have put in place some sort of an infrastructure," DeLauro said. "You don't start saying, 'I'm going to change the world,' and then don't figure out how the heck you're going to do that."
She also criticized the order as being too geographically limited. She said companies currently manufacturing in China could move operations to places such as Vietnam and Thailand and export it from there in efforts to skirt the de minimis ban on Chinese goods.
The President has now put the Commerce Secretary Lutnick in charge of figuring out how to make the de minimus ban work.
In a public statement, the postal service said it was working with CBP to "implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery."
FTZ Ocean Shipping Costs To Rise Under USTR Proposal
The United States Trade Representative has proposed a $1.5 million fee for Chinese-flagged vessels entering U.S. ocean ports, according to Reuters.
This new proposal would surely add costs to ocean deliveries, given China’s dominance in the global shipping industry.
According to USTR’s report, China’s global share of shipbuilding tonnage spiked from 5 per cent in 1999 to over 50 per cent in 2023.
This substantial rise was attributed to massive state subsidies and preferential treatment for government enterprises that effectively overpowered private-sector international competitors. The agency also noted that US shipyards had, in parallel, seen a dramatic drop in shipbuilding from 70 ships built in 1975 to a mere five ships per year today. (more)
The probe, conducted under Section 301 of the Trade Act of 1974, was initiated at the request of the United Steelworkers and four other unions last April. Its goal was to revitalise an industry that has been in steep decline since the 1970s when Japan and South Korea were at the forefront of shipbuilding.
The results of the probe were announced just days before Inauguration Day in January.
The report suggests charges of up to $1.5 million per port entry on non-Chinese maritime transport operators using Chinese-built vessels, while operators with fleets that are more than 50 per cent Chinese-built would pay $1 million per vessel. The fee decreases in proportion to a fleet’s percentage of Chinese-built ships, with a charge of $750,000 for fleets that are 25 per cent to 50 per cent Chinese-built and $500,000 for those below 25 per cent.
A similar set of fees may also apply to maritime operators with vessels scheduled for delivery from Chinese shipyards within the next two years, according to Reuters.
The USTR stated, however, that the proposal includes a refund of up to $1 million per US port entry for US-built vessels operating in international maritime services.
The remedies also mandate that no less than 1 per cent of US exports be transported on US-flagged vessels for the first two years, increasing to 3 per cent after two years and 5 per cent after three years.
Additionally, from year three onward, at least 3 per cent of exports must be carried on American-built ships and by year seven, the policy would require a minimum of 15 per cent of US exports to be shipped on US-flagged vessels, with at least 5 per cent transported on American-built ships, reported Reuters.
FTZ Staff Activity
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-11-2025) in FTZ 26AA on behalf of Atlanta Bonded Warehouse, Atlanta, GA on January 23, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-12-2025) in FTZ 104Q on behalf of Central Logistics, Garden City, GA on January 27, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-13-2025) in FTZ 104R on behalf of Aertssen Logistics USA, Inc., Rincon, GA on January 31, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-14-2025) in FTZ 281 on behalf of Venture Logistics, LLC, Doral, FL on January 31, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-15-2025) in FTZ 107G on behalf of Lely North America, Inc., Pella, IA on February 3, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-16-2025) in FTZ 94 on behalf of North American Forwarding, Inc. dba Axys Logistics, Inc., Laredo, TX on February 3, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-17-2025) in FTZ 32 on behalf of Sun Commodities Inc. dba Global Marine Supply Co., Miami, FL on February 4, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-18-2025) in FTZ 82K on behalf of International Warehousing and Shipping, Mobile, AL on February 4, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-19-2025) in FTZ 147J on behalf of New Era Cap, LLC, Bernville, PA on February 5, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-20-2025) in FTZ 104S on behalf of Georgia Ports Authority, Savannah, GA on February 6, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-21-2025) in FTZ 39 on behalf of Mouser Electronics, Inc., Mansfield, TX on February 5, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-22-2025) in FTZ 49 on behalf of Expeditors International of WA, Inc., Carteret, NJ on February 7, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-23-2025) in FTZ 74G on behalf of S.H. Bell Company, LLC, Sparrows Point, MD on February 7, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-24-2025) in FTZ 20 on behalf of NGL Energy Partners, Chesapeake, VA on February 10, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-25-2025) in FTZ 20 on behalf of Katoen Natie Norfolk, Norfolk, VA on February 10, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-26-2025) in FTZ 281 on behalf of Galpa Export Corporation, Doral, FL on February 10, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-27-2025) in FTZ 281 on behalf of Data Tech, Inc., Sweetwater, FL on February 10, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-28-2025) in FTZ 138I on behalf of Intel Corporation, New Albany, OH on February 10, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-29-2025) in FTZ 99I on behalf of Bloom Energy Corporation, Newark, DE on February 11, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-30-2025) in FTZ 81G on behalf of Sazerac Company, Inc., Portsmouth, NH on February 12, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-31-2025) in FTZ 153M on behalf of Hudson Trading Group, LLC, San Diego, CA on February 13, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-32-2025) in FTZ 35 on behalf of CSC Sugar, LLC, Morrisville, PA on February 13, 2025
- FTZ Board Staff processed a processed a Termination (S-33-2025) in FTZ 75O on behalf of TSMC Arizona Corporation, Avondale, AZ on February 14, 2025
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-7F-2024) subject to the activation limit of FTZ 247 on behalf of Puerto Rico Energy, LLC, Carolina, PR on February 20, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-35M-2025) in FTZ 49Z on behalf of TRC Electronics, Inc., Doylestown, PA on February 6, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-18-2025) in FTZ 68 on behalf of SNRA Commodities, Inc. Fabens, TX on February 8, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-18-2025) in FTZ 26 on behalf of ShipNetwork, Lithia Springs, GA on February 14, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-19-2025) in FTZ 38A on behalf of BMW Manufacturing Co., LLC, Greer, SC on February 14, 2025
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-19-2025) in FTZ 32 on behalf of Comfortside, LLC, Hialeah, FL on February 21, 2025
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-40-2025) subject to the activation limit of FTZ 205 on behalf of Rincon Power, LLC, Carpinteria, CA on February 20, 2025
Foreign-Trade Zone Board Activity
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- Rincon Power, LLC submitted a notification requesting production activity for contactors, relays, and switches within Foreign-Trade Zone 205 in Carpinteria, California. MORE
- Halo Industries, Inc. submitted a notification requesting production activity for semiconductor wafers within Foreign-Trade Zone 18 in Santa Clara, California. MORE
- RECARO Aircraft Seating Americas, LLC received authorization of production activity for aircraft seats in Foreign-Trade Zone 196 in Fort Worth, Texas. MORE
- Swagelok Company received approval to expand Foreign-Trade Zone 40I to include a new site in Solon, Ohio. MORE
- Lilly del Caribe, Inc. submitted a notification requesting production activity for additional pharmaceutical products and components within Foreign-Trade Zone 7K in Carolina, Puerto Rico. MORE
- Rincon Power, LLC withdrew its notification requesting production activity for contactors, relays, and switches within Foreign-Trade Zone 205 in Carpinteria, California. MORE
- Kaiser Aluminum Fabricated Products, LLC submitted a notification requesting production activity for aluminum products within Foreign-Trade Zone 207 in Richmond, Virginia. MORE
- PPL Healthcare dba Piramal Pharma Solutions (Piramal) submitted a notification requesting production activity for cholesterol medication within Foreign-Trade Zone 35 in Philadelphia, Pennsylvania. MORE
- Merck, Sharp & Dohme LLC received authorization of production activity for additional components of pharmaceutical products for research and development within Foreign-Trade Zone 49Y in Rahway, New Jersey. MORE
- SNRA Commodities, Inc. submitted an application to operate its facilities in Fabens, Texas as a subzone of Foreign-Trade Zone 68. MORE
- Puerto Rico Energy LLC submitted an application to expand Foreign-Trade Zone 7F with additional acreage in Site #3 in Carolina, Puerto Rico. MORE
- Philip Stein Holding, Inc. submitted a notification requesting production activity for watches and watch bands within Foreign-Trade Zone 25 in Pembroke Park, Florida. MORE
- Kawasaki Motors Manufacturing Corp., U.S.A. received authorization of production activity for additional components of four-wheeled personal transportation vehicles in Foreign-Trade Zone 59A in Lincoln, Nebraska. MORE
- Rincon Power, LLC submitted an application to operate its facilities in Carpinteria, California as a subzone of Foreign-Trade Zone 205. MORE
- Eagle Electronics submitted a notification requesting production activity for cellular modules within Foreign-Trade Zone 40 in Solon, Ohio. MORE
Time To Push Your Head Back On:
International traders know just what it feels like to be a Rock ‘Em Sock ‘Em Robot.
Last month was just one punch after another. First they had to add 10% to China. Then 25% on steel and aluminum, including derivatives. Now 25% on everything from Canada and Mexico. Plus another 10% on China. 25% on Europe in four weeks. This fall maybe copper and copper derivatives.
International traders spent the month dealing with one additional tariff after another. Including the new ones that go into effect today. Most items imported from Canada and Mexico haven’t had a U.S. tariff applied in 30 years. It opens a whole new category of merchandise, and merchandise traders, that will benefit from use of the foreign-trade zones program.
There’s no time to waste. Push your head back on and keep swinging.
