In times of trade war, some American companies are getting creative to avoid paying tariffs

Facing the barrage of President Donald Trump’s tariffs, Steve Katz is ducking for cover in the trade-war version of a demilitarised zone.

Katz manages a plant at United Chemi-Con in Lansing, North Carolina, a village of about 150 people with no traffic signal. The facility, which makes capacitors for industrial and consumer products, is covered by a foreign-trade zone based in Greensboro.

Trade zones are areas in or near ports of entry under US Customs and Border Protection supervision that are generally considered outside CBP territory. With the blessing of the US government, companies can import goods into the zone with reduced duties on a case-by-case basis.

That can be a vital tool for a company in times of trade war. To avoid US tariffs on imported aluminium from Japan, Katz secured US Customs approval to alter the activated area of the trade zone to include a shipping dock for exports. The company is also hoping to designate a new trade zone around its warehouse in California to avoid tariffs on Chinese imports sent outside the US.

Trade zones aren’t a loophole for avoiding Trump’s tariffs on products destined for the US market, but they can be a way for companies to avoid duties on goods shipped to the US and subsequently exported.

“It’s one of the few tools that we have at our disposal to significantly reduce the impact of these tariffs,” Katz said.