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This is commonly known as an “inverted tariff.” The FTZ allows for a correction of this unintended distortion of the U.S. tariff schedule by allowing the company operating in an FTZ to assess the product at the lower finished product tariff rate, not the higher intermediate input tariff rate, thus providing a net tariff savings. Companies using FTZ procedures may also be able to defer duty and have access to streamlined customs procedures, including "weekly entry" or "direct delivery.”
Status of Auto FTZs
The main reason for using a FTZ for motor vehicle manufacturing in the United States (i...
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