Fact Check: Companies must now pay higher tariffs on inputs used in foreign trade zones.

What We Know

The claim that companies must now pay higher tariffs on inputs used in foreign trade zones (FTZs) is supported by recent changes in U.S. trade policy. Historically, companies importing components into FTZs only paid tariffs on the finished products when they left the zone. However, under new regulations introduced during the Trump administration, companies are now required to pay the tariff rate on the inputs themselves, which can be significantly higher than the rates on finished goods (CNN).

As of 2023, there are 374 FTZs across the United States, which allow businesses to import products and materials duty-free until they are sold in the U.S. market or exported (CNN). This system was designed to help maintain competitiveness during times of high tariffs, similar to the economic conditions during the Great Depression when FTZs were first established (CNN). The U.S. Commerce Department has noted a significant increase in interest in FTZs, with nearly $1 trillion worth of goods imported into these zones in 2023, accounting for almost one-third of all U.S. imports (CNN).

Analysis

The evidence supporting the claim is robust, as it is based on direct statements from industry experts and data from the U.S. Commerce Department. The change in the tariff structure means that companies like Audio-Technica, which imports fully assembled products, now face higher costs due to tariffs on the inputs used in those products (CNN). This shift has led to frustration among businesses that previously benefited from the lower tariff rates on finished goods.

The reliability of the sources is high, as they include statements from credible organizations such as the U.S. Commerce Department and industry experts. CNN, as a major news outlet, provides a comprehensive overview of the situation, citing specific examples and expert opinions, which adds to the credibility of the information presented (CNN).

However, it is important to note that while the new tariff structure is a significant change, the extent to which it affects all companies varies based on their specific circumstances and the types of products they import. Some businesses may still find FTZs beneficial despite the increased costs associated with tariffs on inputs, as they can defer payments until goods are sold (CNN).

Conclusion

The claim that companies must now pay higher tariffs on inputs used in foreign trade zones is True. The evidence clearly indicates that recent changes in U.S. trade policy have resulted in companies facing higher tariff rates on inputs rather than just on finished products. This shift has significant implications for businesses operating within FTZs, as it alters the financial landscape for importing goods.

Fact Check: Companies must now pay higher tariffs on inputs used in foreign trade zones.