A foreign-trade zone (FTZ) is sold on duty you pay later, but that delay saves far less than the pitch promises, because the cost of money is small. Bank prime sat at 7.00 percent on October 29 [1], and at that cost the gain stays hidden. Hold a duty bill for 60 days and you keep just 1.15 percent of it. On a million dollars of duty, that delay holds back $11,507, about a tenth of one percent of the goods behind it at a 10 percent duty rate. What an FTZ changes is the value your duty is charged on and the tariff line it is charged at, making the calendar the smallest of your three levers.

The big picture:

Goods in a zone sit outside customs laws until they are sent into the country [5].

That is the whole product. My read: the duty question leaves the border and becomes a choice you make later. Two rules set the final number, and neither relies on time.

The value duty is charged on is the price paid for the goods when they enter the zone [2]. That rule leaves your parts price as the base, and it strips out the work and profit added inside the zone. The rate is yours. It comes from the line you elect.

Privileged status fixes the foreign goods’ own line at the rate in force on the filing day, while goods you leave alone are treated as the finished item on the entry [2].

Put those two rules against a standard border entry, and the real gain shows. Import a finished good normally, and duty lands on its full price at its own line. Bring the parts in and build the good in the zone, and the base falls to the parts price, while the filing lets you pay either the parts line or the finished line on the same shipment [2]. If the parts sit at 6 percent and the finished good sits at 2 percent, the gap you elect is four points of the parts value.

By the numbers

  • 7.00 percent — Borrowed money cost: Bank prime on October 29, 2026, sets the rate a credit line charges to carry an unpaid duty bill [1].
  • 3.88 percent — Cash yield rate: The effective federal funds rate marks the low end of the same sum, where a million dollars of duty held two months earns $6,378 [1].
  • 0.3464 percent — Formal entry fee: Customs and Border Protection (CBP) charges this fee on the entered value inside a per-entry floor and ceiling adjusted each year [4].
  • 5 years — Bonded warehouse clock: Goods may neither be put nor stay in a bonded warehouse past five years from the day they land [3].

What I’d watch:

The firms paid to run a zone checked these tariff lines before they signed a lease. I have been watching how they model this shift before committing capital.

  • The baseline gap: The work starts by putting each part’s line beside the finished good’s line. That gap decides the case. Where the finished line is lower, the base and the rate both help the importer. Where it is higher, a zone widens the bill.
  • The filing date: Privileged status locks the rate in force on the day a firm files, rather than the day the goods land [2]. Goods under a quota are put at the higher, non-quota rate once that status is granted, which gives away the whole quota benefit [2].
  • The export file: Zone goods that fall under United States-Mexico-Canada Agreement (USMCA) drawback and change in condition cannot go to Mexico or Canada without a duty set on them. That bill is due before the 61st day after export unless an operator shows the duty was paid there [5]. A plant in Monterrey fed from a zone is a duty question, not a shipping step.
  • The entry count: CBP charges the fee per formal entry on the same value, so a weekly entry structure does real work on a large import book [4].
  • The bonded clock: Anything parked in a bonded warehouse hits a five-year wall from the day it lands [3]. A delay that runs into that wall becomes a payment then.

The catch

This piece cannot hand you the rate that decides it. The gap lives in your own tariff lines. Where a part and its finished good share a line, the zone’s math falls back to the delay you were first pitched.

The math also leaves out what a zone costs to run: activation, a stock control and records system, a bond, and the staff to keep the records straight. Those costs remain fixed, while the savings rise with duty volume, so a small importer with a thin gap is just buying expensive paperwork.

One more limit applies to the clock. A delay only counts if the duty is paid in the end, and goods that leave the zone for export pay nothing at all. My read, held loosely: an FTZ pays off where the parts cross several lines and the finished good sits on a cheaper one. Everyone else is simply buying a calendar. Where that gap already sits in your model, our Total Delivered Cost calculator carries the duty line through the waterfall.

At a glance

  • The shift: An FTZ moves the duty question off the border and onto your bill of materials.
  • The number: A 60-day delay is worth just 1.15 percent of the duty at bank prime.
  • The risk: Where parts and finished goods share a tariff line, the zone saves only the calendar.

Related reading

Sources

[1] Federal Reserve Board, “H.15 Selected Interest Rates”, release dated October 30, 2026 — bank prime loan 7.00 percent and federal funds (effective) 3.88 percent, both for 2026 October 29 — https://www.federalreserve.gov/releases/h15/ [2] U.S. Code of Federal Regulations — 19 CFR 146.65, “Classification, valuation, and liquidation” (§ (a)(1) privileged classification at the rate in force on the filing date and the non-quota rule; § (a)(2) nonprivileged classification on transfer; § (b)(2) dutiable value at admission), eCFR edition current as of 2026-10-31 — https://www.ecfr.gov/current/title-19/section-146.65 [3] 19 CFR 146.64, “Entry for warehouse” (§ (d) five-year limit on remaining in a bonded warehouse) — https://www.ecfr.gov/current/title-19/section-146.64 [4] 19 CFR 24.23, “Fees for processing merchandise” (§ (b)(1)(i)(A) 0.3464 percent ad valorem fee; § (b)(1)(i)(B) maximum and minimum fees as adjusted under § 24.22(k)) — https://www.ecfr.gov/current/title-19/section-24.23 [5] 19 U.S.C. § 81c, “Exemption from customs laws of merchandise brought into foreign trade zone” (§ (a) merchandise in a zone; the USMCA drawback export provision with payment before the 61st day), text via the Cornell Legal Information Institute — https://www.law.cornell.edu/uscode/text/19/81c