If customs duty and federal excise taxes apply they are paid only when merchandise is transferred from an FTZ to customs territory of the U.S. or transferred to a NAFTA country (Canada or Mexico).

Merchandise may be imported into a zone and then exported from a zone without the payment of Customs duties and taxes except to certain countries, such as a NAFTA country. Goods may also be imported into an FTZ for destruction without payment of duty or excise taxes.

Inverted tariff relief occurs when imported parts are dutiable at higher rates than the finished product into which they are incorporated. For example, the duty rate on an imported steering wheel is 4 percent if imported directly into the U.S.; however, if that steering wheel is brought into the Foreign Trade Zone and incorporated into an assembled automobile, the duty rate on the finished automobile, including the steering wheel, is 2.5 percent.

Products imported from outside the U.S. and held in a zone for the purpose of storage, sale, exhibition, repackaging, assembly, distribution, sorting, grading, cleaning, mixing, display, manufacturing, or processing, and merchandise produced in the United States and held in a zone for exportation (either in its original form or altered by any of the above methods) is exempt from state and local ad valorem taxes.

Merchandise may remain in a zone indefinitely, regardless if it’s subject to duty.

Customs security requirements and federal criminal sanctions are deterrents against theft. This may result in lower insurance costs, and fewer incidents of loss for imported cargo into the FTZ.