Many of Utah’s business owners may not realize that the Foreign Trade Zone program was created during the Great Depression to help companies compete with overseas rivals in an era of high tariffs. Now that many Utah companies may face the reality of tariffs, it’s a great time to talk about how Salt Lake City’s FTZ can help.
The Foreign-Trade Zone act was passed in 1934 (after the Smoot-Hawley tariffs of 1930). A Foreign Trade Zone is a physical land that has been approved to be exempt from duties and taxes, until the product leaves the facility. FTZ were originally restricted access sites in or near ports of entry which were licensed by the FTZ Board and operated by Customs. Today’s FTZ program encompasses air, land and sea – there are now over 250 authorized FTZ across the United States.
FTZs pose multiple benefits, which companies can use to benefit their bottom line. However, a majority of Utah’s companies are not utilizing our FTZ to its full potential because sometimes the unknown creates uncertainty.
Salt Lake City’s Department of Economic Development is here to fast track any uncertainty because the need to prepare for the possibility of a trade war is now. Companies in Utah should have a sense of urgency to understand the climate they are operating in, and to explore innovative solutions that could give them a competitive advantage.
Overhauling supply chains is one obvious solution but it can be costly and take years to execute. In the short term, an easier and faster way to offset costs is by joining Salt Lake City’s Foreign Trade Zone. Foreign trade zones aren’t a loophole for avoiding tariffs but they can be a way for companies to avoid duties on goods shipped to the U.S. and subsequently exported. If your company is located in the zone, you can take advantage of these benefits. Salt Lake City’s FTZ area encompasses a 60-mile coverage area, including most of Northern Utah. There are recommended parameters for the program, but there is no cost to join.
Our team is working to reach out to as many companies we can. We have responded to those calling our office asking what they could do. While encouraged by some companies reaching out, many companies are still not calling our office. They are losing out on significant opportunities.
Ben Kolendar, Deputy Director of Salt Lake City’s Department of Economic Development said, “One of the companies I was working with last week did some rough calculations to estimate a savings of at least 2-4% on their cost for imported materials. Those savings really add up in the final product cost.”
If your company will be impacted by tariffs and you’re interested to learn more about Salt Lake City’s Foreign Trade Zone, please reach out to us today. If your company doesn’t exactly meet the parameters for an FTZ Utah has great resources for help such as the World Trade Center, a United States Commercial Service Representative and a Manufacturing Extension Partnership to name a few. As always, we’re here to help connect you.