Considered outside the U.S. Customs territory; some federal laws do not apply to merchandise admitted to an FTZ. Regulated/overseen by U.S. Foreign-Trade Zones Board and U.S. Customs & Border Protection (CBP or Customs).

1.Differences

Considered within U.S. Customs territory; all federal laws apply to merchandise entered into a bonded warehouse. Regulated/overseen by CBP only.

Foreign and domestic merchandise may be admitted to an FTZ.

2. Foreign vs. Domestic Merchandise

Generally, only dutiable imported merchandise and/or merchandise subject to a quota may be entered into a bonded warehouse.

Merchandise may remain in an FTZ for an unlimited period of time.

3. Time Limits

Merchandise in a bonded warehouse may remain there for only five (5) years.

• Importer-operated FTZs or 3PL-operated FTZs
• Warehouse/Distribution-only FTZs or manufacturing/production FTZs.

4.Types

There are different types of Bonded Warehouses: 

• Class 1: Merchandise undergoing examination by Customs, under seizure, or pending final release from Customs custody.
• Class 2: Importers’ private bonded warehouses used exclusively for the storage of merchandise belonging or consigned to the proprietor.
• Class 3: Public bonded warehouses used exclusively for the storage of imported merchandise.
• Class 4: Bonded yards or sheds for the storage of heavy and bulky imported merchandise; stables, feeding pens, corrals, or other similar buildings or limited enclosures for the storage of imported animals; and tanks for the storage of imported liquid merchandise in bulk.
• Class 5: Bonded bins or parts of buildings or of elevators to be used for the storage of grain.
• Class 6: Warehouses for the manufacture in bond, solely for exportation, of articles made in whole or in part of imported materials or of materials subject to IRS tax; and for the manufacture for home consumption or exportation of cigars in whole of tobacco imported from one country.
• Class 7: Warehouses bonded for smelting and refining imported metal-bearing materials for exportation or domestic consumption.
• Class 8: Warehouses for the purpose of cleaning, sorting, repacking, or otherwise changing in condition, but not manufacturing, imported merchandise.
• Class 9: Duty-free stores.
• Class 11: General Order warehouses.

Merchandise is ‘admitted’ on a CBP Form 214/FTZ Admission, which is not a customs entry.

5. Customs Filings Upon Merchandise Arrival to U.S.

Merchandise is ‘entered for warehouse’ on a CBP Form 7501/Warehouse Entry, which is a customs entry.

FTZs can have domestic and foreign merchandise stored together in the activated area, and merchandise of both types can be commingled and/or combined in an FTZ. Inventory can be managed by Lot # or by UIN (Part Number/SKU) with depletion under FIFO or FOFI methodology.

6. Merchandise Handling

Bonded warehouses may only store imported dutiable merchandise in the active bonded warehouse area and therefore cannot commingle foreign and domestic merchandise. Inventory can be managed by Lot # or, with approval from U.S. Customs, by UIN (Part Number/SKU) with depletion under FIFO methodology. Commingling and/or combining of merchandise is restricted.

Different ‘Zone Statuses’ allow classification and duty/tariff payment either in condition of merchandise as admitted to FTZ privileged foreign status (PF) or merchandise upon withdrawal from FTZ non-privileged foreign status (NPF).

June 3, 2025- Presidential Proclamation- Steel and Aluminum, changed the applicability of Section 232 tariff for steel and aluminum materials previously entered into an FTZ before June 4, 2025

• Will be required to pay 50% duty/tariff when the material is withdrawn from the FTZ for U.S. Consumption.

7. Tariff & Classification

Duty/tariff rates are paid based on the date of the bonded warehouse withdrawal entry.

FTZs provide a wide range of savings opportunities related to scrap, loss, obsolescence, damaged goods and waste, including possible duty/tariff elimination through destruction to the point of no commercial value.

8. Scrap/Waste & Obsolescence

Bonded warehouses provide a limited scope related to destruction.

Most importers may utilize FTZ weekly entry procedures to withdraw merchandise for U.S. consumption, which may provide considerable financial savings and logistics benefits.

9. Withdrawals for U.S. Consumption

No weekly entry option. Bonded warehouse withdrawal entries are individual in nature per bonded warehouse entry, which may be feasible for certain companies, commodities and shipping patterns but may be cumbersome for others.

Merchandise in non-privileged foreign (NPF) status can be transferred for entry into a bonded warehouse with certain date restrictions. However, merchandise in privileged foreign (PF) status cannot be entered into a bonded warehouse from an FTZ.

10. Restrictions on Transfers

Bonded warehouse entered merchandise can only be transferred for admission to an FTZ for exportation or destruction in Zone Restricted (ZR) Status.