The New FTZ Tariff Rules Food Importers Need to Understand
By Troy Snelson
The rules for how tariff rates are calculated on FTZ goods changed twice in the past twelve months. If you have not reviewed your FTZ tariff management approach since before April 2025, there is a reasonable chance the math has changed on you. The rate you expect to pay when goods leave your zone may not be the rate that actually applies.
In this article, you’ll discover:
- Why FTZ tariff rules changed twice in the last twelve months
- What Privileged Foreign status means and which goods must now carry it
- How rate-at-admission differs from how bonded warehouses calculate duty
- When each structure works in your favor depending on tariff direction
- What to confirm with your customs broker before your next FTZ admission
Two Shifts That Changed FTZ Tariff Management
1. Reciprocal Tariff Executive Orders, April 2025
Executive orders imposing reciprocal tariffs on most U.S. imports included a specific requirement for FTZ operators: goods subject to those tariffs admitted into a foreign trade zone on or after April 9, 2025 had to carry Privileged Foreign status. That designation, known as PF status, locks in the applicable duty rate at the moment of admission rather than at withdrawal. For importers accustomed to paying the rate in effect when goods shipped out of the zone, that was a significant change.
2. Supreme Court Ruling and Section 122 Surcharges, February 2026
On February 20, the Supreme Court struck down the IEEPA-based tariffs underlying the reciprocal tariff program. A new Section 122 surcharge replaced them within days, and the PF status requirement carried over intact. According to BDO’s customs and trade advisory team, goods admitted into FTZ locations on or after February 24, 2026 and subject to the new surcharge must be admitted under PF status. Importers who set their FTZ tariff management strategy before either of these changes should review their current position.
What Privileged Foreign Status Actually Does
Before these changes, many FTZ users operated under Non-Privileged Foreign status, which applied the duty rate in effect at withdrawal. If tariffs dropped before goods shipped into commerce, importers paid the lower rate. PF status removes that flexibility for affected goods. The rate is set when goods enter the zone and it holds, regardless of what happens to tariff policy between admission and withdrawal. For a full comparison of how FTZ and bonded warehouse operations differ structurally, the FTZ vs. bonded warehouse breakdown covers the operational details. On tariff timing specifically:
| FTZ — PF Status | FTZ — NPF Status | Bonded Warehouse | |
|---|---|---|---|
| Rate set at | Admission | Withdrawal | Withdrawal |
| Applies to | Goods subject to reciprocal tariffs and Section 122 surcharges — required | Goods not subject to current additional tariffs only | All goods — no status designation required |
| Duty deferral | Yes — pay at withdrawal, not admission | Yes | Yes — up to 5 years |
| Storage limit | Unlimited | Unlimited | 5 years from date of import |
| Best when tariffs are | Rising or stable — locks in today’s rate | Falling — pays rate at withdrawal if rates drop | Falling — pays rate at withdrawal if rates drop |
When Rate Lock-In Works in Your Favor
If tariff rates are stable or more likely to rise, PF status in an FTZ is the more protective position. You are paying today’s rate regardless of what happens to policy between now and the time product ships. For food and beverage importers moving high-volume goods subject to current surcharges, that certainty has real value. It removes one variable from your landed cost calculation and makes forward planning more manageable, particularly when you are already coordinating compliance requirements like FSMA 204 alongside your import logistics.
Duty deferral still applies under PF status. You lock the rate at admission and pay it later, when goods enter U.S. commerce. For importers managing seasonal inventory, specialty beverages, or product lines with long sell cycles, that deferral still improves working capital even with a fixed rate.
When a Bonded Warehouse Has the Edge
The bonded warehouse argument gets stronger when there is a reasonable case that rates will fall before goods need to ship. The rate-at-withdrawal structure lets importers wait out a policy change and pay the lower rate if one materializes. Holding goods longer adds storage cost, and the outcome is not guaranteed. But with active trade negotiations ongoing and tariff authority questions still unsettled, withdrawal-rate flexibility has logic for certain operations and product categories.
A few factors that currently favor the bonded warehouse approach:
- Expectation of rate decreases: Country-specific agreements in progress could reduce rates on particular categories before your storage window closes. A bonded warehouse lets you capture that reduction. FTZ under PF status does not.
- Goods outside current surcharges: Product categories not subject to the reciprocal tariffs or Section 122 surcharges are not required to carry PF status and may still benefit from withdrawal-rate treatment in a bonded warehouse or FTZ under NPF status.
- Shorter inventory cycles: Importers who move product quickly may not need FTZ warehousing’s unlimited storage period. Bonded warehouses allow up to five years of storage and carry less administrative complexity for lower-volume operations.
What Current FTZ Tariff Management Requires
If you are using FTZ warehousing now, start by confirming what status your goods carry and when they were admitted. Goods admitted before April 9, 2025, after that date, and in the transition window around February 24, 2026 may each carry different rate implications. CBP is still working through procedural guidance on the February transition period, according to the National Association of Foreign-Trade Zones.
If you are evaluating which structure to use for upcoming imports, the right answer depends on your product classification, your tariff exposure, and your read on where rates are headed. A licensed customs broker with FTZ experience is the right resource for that analysis, not a general freight forwarder. Importers routing goods through Savannah into Atlanta-area distribution also have corridor timing considerations that connect directly to FTZ admission windows and container return planning.
If you are evaluating FTZ warehousing for food and beverage imports coming through East Coast ports, Atlanta Bonded Warehouse operates five activated FTZ locations in the Atlanta metro area with direct integration into warehousing, co-packaging, and transportation services. Contact us to discuss your import requirements.
Frequently Asked Questions
What is Privileged Foreign status and why does it matter for FTZ warehousing?
PF status locks in the applicable duty rate at the time goods are admitted into a foreign trade zone. Under the reciprocal tariff orders issued in April 2025, and the Section 122 surcharges that replaced them in February 2026, goods subject to those additional tariffs must carry PF status upon FTZ admission. The rate in effect on the day goods enter the zone is the rate that applies when they exit into U.S. commerce.
How does an FTZ under PF status compare to a bonded warehouse on tariff timing?
An FTZ under PF status locks in the duty rate at admission. A bonded warehouse applies the rate in effect at the time of withdrawal. In a rising tariff environment, the FTZ rate lock protects against future increases. In a falling tariff environment, the bonded warehouse structure lets importers pay a lower rate if policy changes before goods ship. The better structure depends on your tariff outlook and product timeline.
Can goods in an FTZ still use Non-Privileged Foreign status?
NPF status remains available for goods not subject to the reciprocal tariffs or Section 122 surcharges. For goods that are subject to those additional tariffs, NPF status is no longer permitted. If you are uncertain whether your product category is affected, a licensed customs broker can confirm based on your HTS classification.
What happened to goods admitted into FTZs before the April 2025 executive orders?
Goods admitted before April 9, 2025 were not subject to the PF status requirement and may carry different duty status than goods admitted after that date. Importers with inventory across multiple admission dates should confirm the status of each lot with their customs broker, since the rate calculation depends on when each admission occurred.
Does the February 2026 Supreme Court ruling affect goods already in FTZ storage?
The ruling invalidated the IEEPA-based tariffs underlying the reciprocal tariff program. The administration replaced them with Section 122 surcharges effective February 24, 2026, with the PF status requirement intact. CBP is still issuing procedural guidance on entries filed during the transition window. Importers with goods admitted in that period should coordinate with their customs broker and monitor CBP guidance as it is released.
Should food and beverage importers be using FTZ warehousing right now?
FTZ warehousing remains a strong tool for duty deferral and long-term inventory positioning. Whether it is the right structure depends on your product’s tariff exposure, the expected direction of rates, and your inventory cycle. The rate-lock mechanics described above make the evaluation more specific than it was two years ago. Importers who have not reviewed their FTZ approach since before April 2025 should do so before their next shipment.