07/03/25 Afternoon CommStock Report – What are Free Trade Zones in the US and How are They Used?

Until I was introduced to Free Trade Zones by Kevin Walmsley in his On China podcast, I did not know that they existed. He gave these bullet points to describe FTZs and what they are being used for. I can see that they provide some flexibility being an advantage in the current trade war.   (Walmsley) “Supply chain executives use just-in-time inventory management systems to carefully balance forecasted demand, against the high costs of stocking goods.   But the escalation of tariffs between the US and China compelled them to fill all available warehouse space, in the hope that a resolution would be reached before tripling prices at the retail level.   Foreign Trade Zones were a valuable tool to this end. FTZ’s are scattered throughout the United States, and serve vast areas of the country. Wholesalers can legally import and stockpile product in bonded warehouses in FTZ’s, and delay paying tariffs until the goods are withdrawn for sale or use.   Supply chain executives took an expensive gamble that the tariffs would come down before their shelves emptied, and even directed Chinese shipments to warehouses in Canada to further build out available stock. With the tariff rates dropping from…