FTZ vs. Bonded Warehouse: What’s the Difference and Which One is Right for You?

Everyone’s favorite new acronym? FTZ.
It feels like every time tariffs go up or trade policies shift, someone’s quick to say, “Just put it in an FTZ” — or a bonded warehouse. These two terms get tossed around like synonyms, and for good reason: both can be used to delay or reduce duties and optimize your import strategy.

But while they sound similar and share some overlapping benefits, FTZs and bonded warehouses are not interchangeable.

For importers, exporters, and logistics professionals, there’s a lot of pressure to reduce landed costs, manage duties, and improve inventory flow. Two powerful tools in your customs strategy toolkit are:

• Foreign-Trade Zones (FTZs)
• Bonded Warehouses

This guide breaks down what they are, how they differ, and when to use each — so you can choose the right path for your products, partners, and bottom line.

What is a Bonded Warehouse?

A Customs bonded warehouse is a secure storage facility authorized by U.S. Customs and Border Protection (CBP) where imported goods can be stored, manipulated, or undergo manufacturing operations without paying duties or taxes — for up to 5 years.

Goods held in a bonded warehouse are still technically in transit. Duties are only paid when the merchandise leaves the warehouse for domestic consumption. If the goods are re-exported, no duties are ever paid.

Key Benefits:

• Deferred duty payment: No customs duties until goods enter U.S. commerce.
• Avoid double taxation: Re-export without ever paying U.S. duties.
• Extended storage: Keep goods for up to 5 years.
• Strategic inventory control: Ideal for managing seasonal or uncertain demand.
• Close to ports: Fast re-export options.

Bonded warehouses are particularly useful when you're unsure whether you'll sell domestically or internationally — or if you anticipate re-exporting products to other countries.

What is a Foreign-Trade Zone (FTZ)?

An FTZ is a designated location within the U.S. that’s considered outside U.S. customs territory for duty purposes. It’s more than just storage — companies can assemble, manufacture, repackage, and process goods within an FTZ before they’re officially imported.

Established under the Foreign-Trade Zones Act of 1934, FTZs are regulated by the Foreign-Trade Zones Board and monitored by CBP.

Key Benefits:

• Duty deferral or elimination: No duty or federal excise tax until goods enter U.S. commerce.
• Inverted tariff relief: Pay duty on finished goods if that rate is lower than the component parts.
• No duty on re-exports: Same as bonded warehouses.
• No time limit: Merchandise can remain in an FTZ indefinitely.
• Property tax benefits: Some exemptions from state/local taxes.
• Efficient manufacturing: Import components, process them, and choose the most favorable duty rate.

FTZs are typically used by U.S.-based manufacturers and large-scale importers that process or assemble products and want to reduce overall duties and streamline customs procedures.

Key Differences at a Glance

When Should You Use a Bonded Warehouse?

Choose a bonded warehouse when:

• You’re importing goods but may re-export them.
• You need temporary, duty-free storage close to ports or airports.
• You don’t need complex manufacturing or value-added services.
• You want a simpler, faster solution to get started with duty deferral.

Bonded warehouses are a great option for brands testing new markets, managing seasonal inventory, or navigating uncertain demand across geographies.

When Should You Use an FTZ?

Choose an FTZ when:

• You’re assembling, packaging, or manufacturing within the U.S.
• You import a large volume of parts and want to benefit from inverted tariffs.
• You need long-term storage with flexibility to enter or re-export.
• You’re looking for customs and tax efficiency at scale.

FTZs work well for companies committed to U.S.-based operations, especially if they regularly process goods and want to optimize duty rates.

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Final Thoughts

FTZs and bonded warehouses are both powerful tools, but the right one depends on your business model. If you’re storing imported goods and want flexibility on duties, a bonded warehouse might be your best bet. If you’re importing components, assembling products, and want to control duty exposure throughout the process, an FTZ offers greater long-term value.

At Slotted, we help businesses find the right 3PL partners — including those with bonded warehouse or FTZ capabilities. Whether you’re rethinking your import strategy or scaling into international markets, we can connect you with fulfillment partners who have the right infrastructure and customs expertise.

Ready to find a 3PL that fits your customs strategy?
Let Slotted match you with providers that offer FTZ or bonded warehouse solutions tailored to your needs.

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