In a recent CNN interview, Port of Seattle Commissioner Ryan Calkins looked out over his harbor and saw… nothing. No ships at berth. No movement. A scene not witnessed since the height of the pandemic. His message? ‘If ports are the canary in the coal mine, the canary is gasping for air.’

At NELSON Worldwide, we’re seeing those effects firsthand. Tariff uncertainty is already hitting industrial and manufacturing clients, affecting everything from design to supply chain planning. That’s why it’s more important than ever to help our clients think ahead—not just react.

So, What Can Be Done?

While there’s no one-size-fits-all solution, two tools are quickly rising to the top of the commercial real estate conversation: Bonded Warehouses and Foreign Trade Zones (FTZs). Here’s what you need to know.

Bonded Warehouses: The Comeback Kid

Bonded Warehouses have been around since the 1800s, but they’ve suddenly become hot again. Why? Because they let companies import goods and delay tariff payments until goods are sold, exported, or moved into the U.S. market for a period of 1 to 5 years.

Key Advantages:

  • Faster setup than FTZs.
  • More flexible and secure for smaller operations.
  • Duties can be waived if goods are damaged or unsellable.
  • Warehouses can undergo the bonding process anywhere and aren’t beholden to specific locations or geographies.
  • Great for logistics and distribution uses.

But Beware:

  • Manufacturing uses are much more restrictive and are almost prohibited.
  • The ‘Bonded’ designation only lasts for 1-5 years.
  • If a tariff rate drops in future years, you are subject to paying the tariff rate at the time the goods came into the country, which could potentially be higher.
  • There are only about 1,750 in the U.S., which makes them hard to find today.
  • Inventory is more highly scrutinized because US Customs and Border Protection controls the process and has more oversight.

Best for: Small-to-mid-sized companies storing high-value goods like alcohol, electronics, luxury items, or parts that don’t need to be moved immediately.

Foreign Trade Zones (FTZs): The Long-Term Play

FTZs are special zones considered outside of U.S. territory. Unlike bonded warehouses that have US Customs and Border Protection oversight, FTZs are controlled largely by the US Department of Commerce. A huge benefit of FTZs is their inverted tariff structure – which means the tariff rate on the final assembled product (after manufacturing/processing within the FTZ) is lower than the tariff rate on the imported components that make up that product. Additionally, if goods are exported outside of the US, you may not need to pay tariffs at all!

Key Advantages:

  • Inverted tariffs: Pay a lower rate on finished goods than on the singular components.
  • Unlimited storage time.
  • Potentially no tariffs on exports outside the US.
  • Ideal for manufacturing and/or assembly, as well as distribution (multiple uses allowed).
  • Less oversight by an outside agency managing inventory as the owner has more control over their inventory.

Drawbacks:

  • It can only be within specific locations.
  • Longer, more complex approval process to create an FTZ.
  • Higher overhead costs that the owner or tenant is responsible for (because of managing your inventory).
  • If goods are lost, stolen, or damaged, duties are still required to be paid.

Best for:  Medium to large manufacturers with a global footprint in verticals like automotive, aerospace, pharma, and electronics who will re-export finished goods and take advantage of the inverted tariff structure.

Timing Is Everything

Here’s a subtle but critical detail: when tariffs are paid differs by option.

  • Bonded Warehouse: The tariff rate is applied when goods enter and are processed by US Customs and Border Protection, not when they leave
  • FTZ: Tariff rate applies when goods leave, not when they enter—unless exported outside of the country (which could mean no tariff payment at all).

So What’s the Right Fit?

In general, bonded warehouses work best for logistics-focused companies storing high-value goods that move slowly and need short-term cash flow flexibility. Think alcohol, luxury items, or pharmaceuticals.

Foreign Trade Zones (FTZs) are a better fit for manufacturers importing components, assembling products, and exporting finished goods—like those in automotive, pharma, or aerospace.

Every operation is different, so we tailor recommendations case-by-case. If you’re looking for immediate relief, bonded warehouses may be the faster play. For long-term savings and export efficiency, FTZs offer more upside.

Final Thoughts: Navigate the Swings, Don’t Just Ride Them

Tariffs aren’t just policy—they’re a moving target. In one 72-hour stretch, U.S. tariffs on Chinese goods dropped from 145% to 30%. That kind of volatility makes it essential to have options.

At NELSON, we’re helping clients not just weather the storm—but use it to their advantage. Whether it’s the stopgap relief of a bonded warehouse or the long-term payoff of an FTZ, we’re building flexibility into their operations so they can thrive—regardless of what’s on the horizon.