Tariffs on Your Terms: How Foreign Trade Zones Can Safeguard Your Supply Chain

Tariffs on Your Terms: How Foreign Trade Zones Can Safeguard Your Supply Chain

Are you struggling to protect your margins and cash flow amid rising trade tensions and shifting tariff policies? One effective strategy in this uncertain environment is to use warehousing in Foreign-Trade Zones (FTZs).

FTZs enable companies to defer, reduce, or waive duties on imported goods. Duties are only paid when products leave the facility and are shipped to U.S. buyers, which allows a "sell first, pay later" approach that frees up working capital.

From electronics to cosmetics, companies across various industries are collaborating with supply chain experts to manage tariff exposure. Here’s how working with a fully integrated partner can help you realize the full potential of FTZ warehousing.

What Is a Foreign-Trade Zone, and Why Does It Matter?

Tariff changes in 2025 are significant, with 50% duties on steel and aluminum, 25% on automobiles, and many other goods facing new or increased tariffs ranging from 25% to 40%.

An FTZ serves as a duty-free buffer zone. There are approximately 260 designated FTZs nationwide where goods can enter without paying tariffs immediately upon arrival.

Within these zones, companies are permitted to store, assemble, or manufacture products. When the goods leave the FTZ, duties are paid based on the rates effective when the goods first entered the zone, not at the time of shipment.

However, using a warehouse in an FTZ alone is not enough. Providers that only offer basic storage often fall short of helping companies truly optimize their inventory, cash flow, and landed costs. Let’s examine four key scenarios where FTZ warehousing, combined with a full-service partner, delivers the most value.

• Manage the logistics for assembled goods with imported components: U.S. regulations permit manufacturing within FTZs. If the finished product has a lower duty rate than the individual components, the importer can pay the lower duty rate, a process known as inverted tariff relief.
• Decode tariff changes and ensure compliance: The product’s origin, manufacturing process, and packaging all influence duty classification. An FTZ warehousing partner can save money by simplifying customs procedures and reducing paperwork.
• Synchronize your supply chain: FTZs enable you to defer tariff payments, providing greater flexibility by avoiding capital tied up in upfront duty payments and facilitating more flexible inventory management.
• Build, import, and export with complete control: Companies can establish facilities with logistical support within FTZs to manufacture finished goods and ship them internationally. If the goods never enter U.S. commerce, no duties are paid.

Why Use Knight-Swift Warehousing and Fulfillment?

Knight-Swift Warehousing and Fulfillment (KSWF) provides a comprehensive FTZ solution that exceeds traditional storage. Located in Southern California, we have the infrastructure and expertise to manage complex FTZ operations, helping to strengthen your competitive advantage.

Our comprehensive solution helps businesses optimize their supply chains and minimize duty exposure. Here’s how partnering with us puts you in control:

Customs Expertise When It Counts

Knight-Swift’s team knows how to classify, route, and store goods to minimize exposure and ensure you don’t pay more in tariffs than necessary.

Flexible Inventory Management

Whether your goods are offshore, crossing the Pacific, or waiting at the Port of Los Angeles, you can route them through Knight-Swift’s FTZ network. This provides more time and options to respond quickly to market shifts and regulatory changes.

Integrated Fulfillment Capabilities

With services like pick, pack, and ship, Knight-Swift guarantees smooth transitions from warehouse to customer, without unnecessary handoffs. Setup and storage fees apply for FTZ warehousing, but the value is maximized through seamless order execution from origin to final destination.

Strategic Locations

In addition to offering FTZ warehousing in Southern California, and Dallas, TX.  Knight-Swift provides fully integrated transportation and logistics services, including customs brokering, e-commerce fulfillment, B2B distribution, transloading, and cross-docking.  

In locations where we do not currently have warehousing, we offer access to the country's largest transportation network built to accommodate Truckload and Less-than-Truckload capacity networks. This nationwide reach allows us to move your goods anywhere. 

Tech giants like Apple and Intel, as well as small and mid-sized businesses, rely on FTZ infrastructure for support. Our Phoenix-area truckload operations are strategically located within an efficient trade corridor, providing shippers with direct access to top-tier transportation and logistics services.

The Bottom Line: Control What You Can

You can’t predict future tariffs, but you can get ready for them. Partnering with a trusted FTZ operator, like Knight-Swift Warehousing and Fulfillment, helps protect your bottom line, boost liquidity, and keep your supply chain running smoothly.

Tariffs shouldn’t dictate your profitability. With a proper FTZ strategy, you decide when and how to pay.

Contact Knight-Swift Warehousing & Fulfillment today to learn how our FTZ warehousing and fulfillment solutions can help you manage your tariff exposure and your supply chain.