Foreign Trade Zone
FAQ & Calculator
Foreign-Trade Zones can help companies reduce customs costs, improve cash flow, and add flexibility to import, export, and distribution operations. Below are answers to the questions companies ask most often.
Frequently Asked Questions
Example FTZ Calculations
The examples below are intended to be illustrative, not predictive. Each one shows both the estimated annual FTZ savings and the estimated annual cost of operating the FTZ program, including the FTZ #102 annual fee of $7,500 and an assumed internal compliance staffing cost. FTZ economics vary by tariff classification, shipment frequency, export volume, scrap rates, and whether production-related benefits are approved for the operation. For the weekly-entry examples below, the math uses the current 2026 Merchandise Processing Fee limits: 0.3464% ad valorem, with a minimum of $33.58 and a maximum of $651.50 per formal entry.
Example 1
Auto Parts Manufacturer
A U.S. auto parts manufacturer imports bearings, castings, electronics, and machined components, then assembles finished drivetrain products for both domestic customers and export markets. This kind of operation is often a strong FTZ candidate because it combines recurring imports, domestic production activity, and outbound exports. FTZ users in St. Louis can also benefit from weekly-entry procedures and the ability to operate at an existing location, while production activity may qualify for tariff advantages if properly authorized.
Illustrative Assumptions
| Annual imported components | $5,000,000 |
|---|---|
| Average duty rate | 3.0% |
| Exports | 20% |
| Eligible domestic volume for inverted-tariff treatment | 60% |
| Scrap rate | 1.5% |
| Formal entries per year without weekly entry | 320 |
Estimated Annual Savings
| Export duty savings | $5,000,000 × 20% × 3.0% = | $30,000 |
|---|---|---|
| Inverted-tariff savings | $5,000,000 × 80% × 60% × (3.0% − 2.0%) = | $24,000 |
| MPF savings | (320 − 52) × $651.50 = | $174,602 |
| Scrap/waste duty savings | $5,000,000 × 1.5% × 3.0% = | $2,250 |
| Total estimated annual FTZ savings | $230,852 | |
Estimated annual FTZ compliance cost
| FTZ #102 annual fee | $7,500 |
|---|---|
| Internal staff time to monitor compliance, inventory controls, reconciliation, and reporting | $30,000 |
| Total estimated annual FTZ operating cost | $37,500 |
Estimated net annual benefit:
$193,352
For an auto parts manufacturer with frequent inbound shipments and some export volume, the FTZ can still produce meaningful net savings even after accounting for the real cost of compliance oversight.
Example 2
Pharmaceutical Manufacturer / Packager
A pharmaceutical company imports active ingredients, excipients, and packaging materials, then performs testing, packaging, labeling, and distribution in the United States. This type of operation can be a strong FTZ fit because pharmaceutical inventory is often high value, may remain in controlled storage for extended periods, and may be re-exported, rejected, or destroyed before domestic release. FTZ procedures can help align customs cost more closely with the commercial outcome of the product.
Illustrative Assumptions
| Annual imported APIs and packaging | $10,000,000 |
|---|---|
| Average duty rate | 4.0% |
| Re-exported volume | 15% |
| Rejected or destroyed volume | 2% |
| Formal entries per year without weekly entry | 180 |
Estimated Annual Savings
| Export/re-export duty saving | $10,000,000 × 15% × 4.0% = | $60,000 |
|---|---|---|
| Rejected/destroyed goods savings | $10,000,000 × 2% × 4.0% = | $8,000 |
| MPF savings | (180 − 52) × $651.50 = | $83,392 |
| Total estimated annual FTZ savings | $151,392 | |
Estimated annual FTZ compliance cost
| FTZ #102 annual fee | $7,500 |
|---|---|
| Internal staff time to manage FTZ records, reporting, product-status controls, and compliance monitoring | $55,000 |
| Total estimated annual FTZ operating cost | $62,500 |
Estimated net annual benefit:
$88,892
For pharmaceutical operations, the value of an FTZ often comes from a combination of export treatment, reduced duty exposure on rejected goods, and better control over when duty is actually paid on high-value inventory.
Example 3
Industrial Chemistry Producer
An industrial chemistry producer imports feedstocks and intermediate compounds, then blends, reacts, and packages finished specialty chemicals for domestic and overseas customers. This kind of business is often well suited to FTZ use because it typically combines large imported input volumes, process loss or waste, recurring customs entries, and a mix of U.S. and export sales. In the right structure, an FTZ can create value through export-related duty elimination, weekly-entry savings, waste-related savings, and production-related tariff benefits where authorized.
Illustrative Assumptions
| Annual imported feedstocks | $20,000,000 |
|---|---|
| Average duty rate | 5.0% |
| Exports | 25% |
| Process loss/waste | 3.0% |
| Eligible domestic volume for inverted-tariff treatment | 50% |
| Finished-product duty rate on eligible domestic withdrawals | 3.5% |
| Formal entries per year without weekly entry | 260 |
Estimated Annual Savings
| Export duty saving | $20,000,000 × 25% × 5.0% = | $250,000 |
|---|---|---|
| Scrap/waste duty savings | $20,000,000 × 3.0% × 5.0% = | $30,000 |
| Inverted-tariff savings | $20,000,000 × 75% × 50% × (5.0% − 3.5%) = | $112,500 |
| MPF savings | (260 − 52) × $651.50 = | $135,512 |
| Total estimated annual FTZ savings | $528,012 | |
Estimated annual FTZ compliance cost
| FTZ #102 annual fee | $7,500 |
|---|---|
| Internal staff time for compliance oversight, inventory control, reconciliation, and reporting | $85,000 |
| Total estimated annual FTZ operating cost | $92,500 |
Estimated net annual benefit:
$435,512
For an industrial chemistry operation with meaningful import volume and regular formal entries, the FTZ can remain financially compelling even after fully accounting for staffing and administrative cost.
What these examples are meant to show
An FTZ tends to make the most sense when a company has regular imports, meaningful duty exposure, frequent formal entries, and either exports, production activity, or inventory that may not ultimately enter U.S. commerce. These examples show that the right operation can still realize strong net value even after adding realistic compliance cost and the local annual FTZ fee.
All of St. Louis County and the City of St. Louis are eligible for FTZ activity. Companies should contact the World Trade Center St. Louis to learn more on how to get started.