How Foreign-Trade Zones (FTZs) Help Manage Post-De Minimis Supply Chain Costs

The trade policy environment for e-commerce brands has changed completely. Stord’s Foreign-Trade Zone warehousing network is here to help.

As of August 29, 2025, the U.S. government officially suspended the de minimis exemption (Section 321) for all low-value commercial imports globally. This is a critical regulatory change that impacts the operating models built by direct-to-consumer (DTC) and fast-fashion brands over the last decade. While the $800 threshold was previously a simple mechanism for duty-free entry and minimal customs friction, its removal signals a new era of increased compliance, complexity and cost management.

The Immediate Impact on Operating Costs and Efficiency

The end of the simplified system forces every previously exempt, low-value shipment into the standard customs pipeline. This transition introduces three primary challenges for brands operating global supply chains:

1. Increased Landed Costs: Shipments are now subject to applicable duties, tariffs, and taxes. This significantly raises the landed cost of goods, which is a financial burden that must be modeled into consumer pricing or absorbed into margins.

2. Logistics Friction and Delays: The sheer volume of formerly low-scrutiny parcels now requires full customs processing, leading to inevitable delays at ports and customs clearing centers as the system adapts to the increased complexity and volume.

3. Heightened Compliance Overhead: Brands must now manage full customs declarations, including detailed documentation (such as Harmonized Tariff Schedule codes) for every package, escalating administrative costs and compliance risk.

Many of these pain points have established workarounds that brands can leverage, but they often require additional sophistication and time demands. For example, a brand might use Customs drawback, a process that allows them to apply for a refund of up to 99% of duties and taxes paid on imported goods that are later exported or destroyed¹. While valuable, this process is complex, time-intensive, and requires meticulous record-keeping for up to five years² - tying up substantial working capital until the refund is processed later. 

In this new post-de minimis world, success hinges not on finding a workaround, but on establishing a smarter, more resilient, and customs-compliant strategy.

What is the Foreign-Trade Zone (FTZ) Solution?

One of the answers to mitigating these new challenges is the Foreign-Trade Zone (FTZ).

An FTZ is a designated, secured warehouse within the U.S. that is legally considered outside of the U.S. Customs territory for duty purposes. This status provides a crucial shield against immediate duties and administrative complexity, transforming a customs liability into a competitive operational asset.

Most people are familiar with the concept of an FTZ as they are the legal structure through which Duty Free shopping within an airport operates.

To leverage this asset effectively for e-commerce, we need to understand how using an FTZ can help manage the rising costs of the post-de minimis supply chain.

4 Benefits of an FTZ to Manage Post-De Minimis Costs

The elimination of the de minimis exemption establishes equality between foreign sellers and U.S.-based FTZ operations. For brands weighing where to locate production or distribution, the FTZ's value of deferring duties on inputs now creates a stronger incentive to invest locally and expand domestic warehousing and manufacturing operations.

The real advantage of an FTZ lies in its “outside of the U.S. Customs territory” status that is key to counteracting the cash flow constraints, exploding administrative fees, and unexpected duties now burdening cross-border shipments.

1. Duty Deferral and Elimination (The Cash Flow Shield)

Typically, as goods enter the U.S., brands are forced to pay duties upfront, tying up substantial working capital before a sale is even guaranteed. The FTZ solves this cash flow crisis instantly.

• Duty Deferral: When merchandise is admitted into an FTZ, duty payment is deferred indefinitely. Duties are only paid when the goods leave the zone and are formally entered into U.S. commerce (the moment they are ready to ship to a U.S. customer)³. This postponement provides a massive cash-flow advantage, especially for businesses with long inventory cycles or seasonal demand.

• Duty Elimination (Re-exports): For brands utilizing the U.S. as a distribution hub, the FTZ is essential. If imported goods are stored, processed, and subsequently re-exported to international markets, they are considered never to have formally entered the U.S. customs territory. This provides a crucial safety valve for excess, seasonal, or slow-moving inventory, allowing brands to re-export unsold stock duty-free. This status eliminates the need for the complex and slow Customs duty drawback process. 

2. Merchandise Processing Fee (MPF) Reduction (Consolidating Costs)

The sudden requirement for full customs entries on every low-value package is the single biggest contributor to increased compliance overhead and logistics friction.

The MPF Cost Surge

The Merchandise Processing Fee (MPF) is an administrative fee levied by the Customs and Border Protections (CBP) on most imports. It is calculated as 0.3464% of the shipment's value (subject to a minimum and maximum cap)⁴.

Without the FTZ consolidation tactic, every single incoming shipment, including thousands of daily e-commerce parcels that once qualified for de minimis, must be filed as an individual formal entry. This means a brand is subjected to the minimum MPF for every package, causing costs to increase rapidly.

The FTZ Countermeasure

The FTZ offers a dramatic countermeasure for high-volume e-commerce shippers:

• The FTZ Solution (Weekly Entry Consolidation): Instead of filing an entry and paying the MPF for every single inbound shipment, FTZ users can consolidate all shipments destined for U.S. consumption into one single weekly Customs entry⁵.

• The Power of the MPF Cap: The MPF for a formal entry is subject to a maximum cap (currently around $634.62)⁴. By consolidating thousands of daily shipments into that single weekly entry, the importer only pays the capped maximum fee, once per week⁶.

As seen on the table below, this consolidation immediately eliminates the per-shipment processing cost, which turns a volatile expense into a predictable, capped cost.

This FTZ tactic caps a potentially multi-million dollar annual expense at roughly $32,000 (Max MPF Cap x 52 weeks). This addresses the logistics friction and compliance overhead that arose after the suspension of the de minimis rule.

3. Inverted Tariff Relief and Value-Added Services

This mechanism allows brands to optimize the product for the end consumer and find the lowest applicable duty rate while recouping costs for damaged goods. This is a critical factor when navigating high, post-de minimis tariff rates.

Inverted Tariff Relief

When manufacturing or processing (ie. kitting or other value-added services) in an FTZ results in a finished product with a lower duty rate than its components, the brand can elect to pay the lower duty rate of the finished product when it leaves the zone⁷. This is a crucial cost-optimization lever that keeps complex assembly operations competitive on U.S. soil.

To better understand this advantage, consider this example: A brand imports high-duty electronic components (classified at 6%) into an FTZ. When assembled into a finished consumer electronics kit (classified at 3%) within the zone, the brand only pays the lower 3% duty rate upon shipment to the U.S. customer.

Kitting, customization, and light assembly in an FTZ are powerful ways to control costs and enhance the customer experience. From assembling gift boxes to applying custom labels, these flexible services transform high-duty components into lower-duty, market-ready products.

Duty-Free Scrapping and Quality Control

Imported products can be inspected, repaired, or certified while inside the FTZ, before duties are assessed. If goods are damaged, defective, or scrapped during assembly (as is common with components), they can be destroyed within the zone, and no duty is ever paid on that non-sellable inventory.

4. Tax Exemption and Indefinite Storage (Maximizing Inventory Capital)

Beyond duties and federal processing fees, an FTZ offers savings on inventory holding costs and crucial operational flexibility:

• Inventory Tax Exemption: In many U.S. jurisdictions, imported products held within an FTZ are, by federal law, exempt from state and local ad valorem (inventory) taxes⁸. This provides a substantial, long-term financial benefit for brands managing high-value inventory, reducing the cost of buffer stock needed to mitigate supply chain volatility.

• Indefinite Storage: Products can be stored in an FTZ indefinitely without incurring duties⁹. This provides maximum flexibility for responding to market demand, seasonal shifts, or regulatory changes without capital being unnecessarily tied up.

It is worth noting, however, that storage rates within an FTZ typically are more expensive than ongoing storage within a normal warehouse. It is crucial for a brand to understand both the potential added expenses and customer demand to determine if long-term storage within an FTZ serves their strategic goals.

Pain of Building Vs. Power of Partnering

For the vast majority of e-commerce brands, attempting to establish a dedicated single-user FTZ is a prohibitive burden. This costly endeavor imposes an avoidable delay on financial relief. Building your own FTZ demands:

• Substantial Upfront Costs: Significant security investments, specialized infrastructure, secure systems, and extensive administrative setup fees, tying up critical growth capital long before the first dollar of savings is realized.

• Regulatory Friction: Federal regulations mandate a review and approval process that consumes up to a year. During this entire waiting period, a brand remains exposed to the full, increasing costs of duties and per-shipment MPFs.

• Expertise Bottleneck: Compliance requires retaining expensive, specialized customs personnel and expertise to manage complex daily filings, creating an unsustainable overhead burden for in-house teams.

The Advantage of Immediate FTZ Access

The market reality is that FTZ benefits are needed today. A viable path to immediately address these new customs liabilities is to leverage an existing, pre-approved network. Only a modern logistics partner with an established, integrated FTZ network, like Stord, can grant this type of immediate, compliant access.

Compared to various alternatives, the FTZ is the complete, robust operational hub. Unlike a Bonded Warehouse, which offers only simple duty deferral and prohibits processing, the FTZ allows for all value-added services (like kitting and assembly), enabling full Inverted Tariff Relief. Looking at standard Domestic Fulfillment, which forces the payment of all duties upfront and immediately ties up working capital, the FTZ grants maximum financial flexibility.

Speed is the ultimate lever. Partnering grants instant, compliant access, allowing brands to bypass the year-long regulatory backlog and instantly secure the operational backbone required to activate duty deferral, cap MPF expenses, and maintain audit-ready status from day one. In the post-de minimis environment, you cannot afford to build your way to compliance. It’s smarter to access it.

Protecting Profits of Post-De Minimis E-commerce

The end of the de minimis exemption is one of the most significant changes to U.S. customs policy in years. It’s important to understand this isn’t a temporary measure. It’s a realignment of U.S. trade policy, driven by years of advocacy from trade groups like the National Association of Foreign-Trade Zones (NAFTZ) to level the playing field¹⁰. There is a very slim chance of the rule being revived in its previous form, and the action is already forcing a global shift toward stricter scrutiny of low-value, high-volume shipments.

The customs "fast lane" has been replaced by non-negotiable customs scrutiny. The new question for every brand is not how to avoid the new costs, but how to turn this situation into a long-term advantage.

The Answer: Integrated, Scalable Compliance

Managing this new commerce environment requires more than a single facility. It needs a scalable, integrated strategy that compliments all future regulatory changes and supply chain disruptions. This is why your modern partner must be able to offer:

• Integrated Compliance: Seamlessly ingesting high-volume, duty-susceptible inventory into a compliant FTZ Network across the country.

• Unified Fulfillment: The power to use those FTZ warehouses for immediate DTC fulfillment or to efficiently feed products into a larger, domestic fulfillment network once duties are paid.

• Total Visibility: A single platform that provides continuous inventory control across both customs-controlled and standard fulfillment centers.

Stord is built to enable this exact strategy. We offer specialized FTZ services integrated with a unified software and physical fulfillment network spanning the U.S. This network currently includes strategic FTZ locations in all critical commerce hubs across the country, ensuring maximum port and domestic coverage.

This geographic coverage ensures not only duty mitigation but also market speed and resilience against regulatory change and other disruptions. To understand the full impact and map your transition strategy, read our comprehensive End of De Minimis Guide today.