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Foreign Trade Zones During a Global Trade War

by Mary Rooney | Sep 11, 2018
During these uncertain times of global trade, companies are looking for options to maintain business operations and keep costs as low as possible. If companies are importing or exporting products that have been impacted by tariffs, they are most likely reviewing current supply chain processes.

With this, many companies are evaluating the benefits of foreign-trade zones (FTZs). The federal program was launched in 1934, to help American companies shield themselves from the global trade war that followed the sweeping tariffs enacted by the Smoot-Hawley Tariff Act. Since then, about 200 zones have popped up across the country, with $610 billion in shipments passing through them, according to the U.S. Foreign-Trade Zones Board’s last publicly available report to Congress.

Companies are awakening to the idea of using foreign-trade zones to help mitigate the impact of tariffs, according to trade consultants and customs brokers. FTZs can be a vital tool for a company in times of trade war.

Locally, Kansas City-based companies have seen multiple benefits from operating in the Greater Kansas City Foreign Trade Zone (GKCFTZ). Utilizing the FTZ program has allowed them to receive inverted duty on the product that stays in the U.S., duty elimination on exports, improved time movement of the materials with direct delivery and weekly entry, reduced delivery cycle and inventory levels, and overall improved supply chain security. As a result, these Kansas City companies have increased facility investment and expansion, added manufacturing and production, and continued job creation.

Read more from Bloomberg.

The Greater Kansas City Foreign Trade Zone, Inc. (GKCFTZ) is a regional grantee of the national FTZ program. GKCFTZ has been the grantee since 1974 and was the first non-profit organization to be designated a grantee. GKCFTZ  sponsors both Foreign-Trade Zone No. 15 in Kansas City, Missouri and Zone No. 17 in Kansas City, Kansas. Zone 15 serves FTZ needs in 22 contiguous counties in the western half Missouri.  Zone 17 presently serves 9 counties in metropolitan Kansas City, KS. 

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