Inside the trade war's tariff hideouts, 'foreign' zones and bonded warehouses
FTZs have a long history dating back to a previous period of trade conflict, created during the Great Depression by Congress to encourage international trade and boost exports at time when the Smoot-Hawley tariffs were as high as 53%.
Companies importing raw materials, semi-finished, or components from foreign countries to an FTZ or bonded warehouse are essentially in a tariff bubble, meaning when they enter the U.S. they are stored duty-free.
Once inside an FTZ, a product can be assembled or modified. Duties are only collected after a product leaves the zone and enters U.S. commerce. Products can be stored in an FTZ indefinitely. Bonded warehouses have a limit of up to five years.
There are FTZs in all 50 states and there are approximately 2,240 FTZs in all across the nation, according to U.S. Customs.
For companies caught in the crossfire of Trump's trade war, preserving cash is king.
By delaying duty payments, "FTZs and bonded warehouses essentially frees up a company's cash flow," said Jason Strickland, director of sales at logistics firm Givens. "There is also the added benefit that if a product is manufactured in an FTZ and is re-exported abroad, no duty payments are incurred at all."
Before the 2025 global trade war, companies that manufactured products in an FTZ had what is known as an "inverted tariff" benefit. That means the company had the option of paying a lower duty rate on the finished product versus paying the higher duties on the individual components brought into the manufacturing process.
Companies that have operated inside FTZs include automakers Ford, GM and Chrysler, as well as General Electric, Intel and Sony. According to the World Free Zones Organization, FTZs were also used by Pfizer while it was developing the Covid vaccine. The program enabled Pfizer to produce shots without incurring additional duties on the drugs' components and store the vaccine until it received FDA approval.
But President Trump ended that rule by way of recent executive orders, and for companies like Regent Tek Industries, which manufactures liquid road markings used by road crews to make the lines on the nation's roads, byways, and highways, that's become a big problem, resulting in millions of dollars in extra tariffs.
"Our product is basically like baking a cake," said Helen Torkos, president of Regent Tek. "If you're missing one ingredient, you can't make that cake. We cannot source all of our components here. We are paying around 7% more now because the inverted tariff option is no longer available to us."
Without the benefit of the FTZ inverted tariff, many companies quickly shifted to bonded warehouses. Strickland described the demand to CNBC as being through the roof.
Companies can import products in a bubble under a higher tariff rate, and store without paying duties. But unlike the locking in of tariff rates on FTZs, if the tariff drops while a product is in a bonded warehouse, the company can release their product and pay the lower tariff rate.
"At the end of the day, the goal is to protect your cash flow," Strickland said. "You don't want to bring in all your goods and spend your cash flow against tariffs that may not be here in, you know, six weeks, six months, if you can defer until the market is ready to consume those goods. I think that's a win-win."
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Crypto exchanges rushed to list Trump's coin - leaving many losers and some big winners
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A Reuters analysis of crypto market data and industry announcements found that, compared to other recent large meme coins, the biggest crypto exchanges took Trump's to market with unusual speed, despite stating they vet risky coins thoroughly to protect small investors. Some also approved the listing in spite of the high share of coins concentrated in the hands of Trump and his partners, which would normally represent a red flag because of the risk that dumping of tokens by insiders could collapse the price and hurt other investors, some executives said. After reaching an all-time high of $75.35 on April 19, just two days after its launch, $TRUMP crashed to the $7 range by early April, leaving many holders nursing losses. It was trading around $9.55 Thursday. "When the president of the United States launches a meme coin, I thought I might as well put some money inside," said Carl 'Moon' Runefelt, a Dubai-based crypto investor who runs a bitcoin trading channel on YouTube called the "Moon Show." Runefelt said he bought $300,000 worth of the meme coin in tranches at between $50 and $60: "It's probably one of my worst trades, unfortunately." The Reuters analysis showed that eight of the 10 largest crypto exchanges by market share listed the coin within 48 hours of its release. The ninth, Coinbase, added $TRUMP to its listings roadmap on January 18 – indicating it had decided to accept it - and listed the coin three days later. The tenth, Upbit, listed $TRUMP on February 13. That was much faster than they've done on average with the biggest meme coins. Reuters examined how long it took the same 10 exchanges - Binance, Bitget, MEXC, OKX, Coinbase, Bybit, Upbit, and HTX - to list the four other largest meme coins launched since 2022. These, measured by market cap on May 29, are Pepe, Bonk, Fartcoin and dogwifhat. All 10 exchanges listed Pepe and Bonk. Nine listed dogwifhat, and seven listed Fartcoin. On average, the 10 exchanges took 129 days to list those coins. For $TRUMP, they took an average of four. Asked for comment about why they listed $TRUMP so quickly, Bitget, MEXC, OKX, Coinbase and Upbit all said they had not cut any corners with their vetting process. The other five exchanges did not respond to Reuters' questions. Three – Bitget, Coinbase, MEXC – said they moved fast to respond to overwhelming demand for the $TRUMP coin. "The crypto space was buzzing with the hype and, as any other token with a growing craze, it was imperative to add TRUMP," Gracy Chen, Bitget's CEO, said in a statement. Chen said the fact that Trump himself announced the coin on his social media accounts "should kind of solve the compliance issue," citing the fact that "he's the president of the United States." 'NO CONFLICTS OF INTEREST' Reuters found no suggestion that Trump or anyone related to his businesses exerted pressure on the exchanges. In response to a request for comment, a White House press official told Reuters the president's assets had been placed in a family trust: "There are no conflicts of interest because the president isn't managing the assets. Any insinuation that there is a conflict of interest is irresponsible." The official referred specific questions about the meme coin to the Trump Organization, which did not respond to Reuters. Coinbase said the $TRUMP token got no special exceptions and the exchange followed its normal process when listing the coin. Paul Grewal, Coinbase's chief legal officer, said many people had to work over the weekend to get the listing done quickly, but no steps were skipped. "Given the information that was shared publicly, we were confident that users could engage with the token positively and safely," Grewal told Reuters. Coinbase listed $TRUMP as an "experimental" token to indicate it comes with "certain risks, including price swings," according to the company's website. The vetting of coins often focuses on how well-known the issuer is, how likely they are to remain in the public eye and how much they engage with the online community to sustain interest in the coin, metrics that $TRUMP would score highly on, according to Santa Clara University finance professor Seoyoung Kim, who specializes in crypto analytics. She cautioned that focusing on vetting speed alone could provide an incomplete picture of investor protection. A more holistic analysis, Kim said, would also involve factors such as the average market cap at which a coin is listed, for how long it has sustained that level before its listing, and its daily trading volumes. With $TRUMP listed so soon after launch, there was little such data for exchanges to parse. $TRUMP's market cap has since fallen to around $1.9 billion, down sharply from its peak above $15 billion on January 19. But that still ranks it amongst the largest meme coins launched since 2022. Reuters ran its listing-speed analysis past five academics with crypto expertise, including Kim, who all said its methodology was sound. David Krause, Emeritus Professor of Finance at Marquette University, who has studied Trump's crypto ventures, said the quickness of the $TRUMP listing "suggests either a dramatic acceleration of due diligence or corners being cut." "Either scenario has significant implications for investor protection and market integrity," he said. 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Following Trump's election, Coinbase – the largest publicly traded crypto exchange in the United States – and several of its rivals began listing more meme coins. In Trump's second term, the SEC has paused or withdrawn high-profile enforcement actions against crypto operators, including a major investor in a Trump family crypto project, and issued a staff statement concluding that meme coins do not constitute securities. An SEC spokesperson declined to comment on the agency's crypto policy and Trump's coin. Trump's family has launched multiple crypto ventures, raking in hundreds of millions of dollars. The $TRUMP token quickly earned an estimated $320 million in fees, though it's not publicly known how that amount has been divided between a Trump-controlled entity and its partners. 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Coinbase, which is subject to New York regulations, blocked state residents from accessing the token, but allowed U.S. customers elsewhere to trade. To list $TRUMP in New York, the exchange would have faced a long list of risk assessment and governance requirements. Some other exchanges acknowledged they looked past concerns about the concentration in a bid to serve customer demand. MEXC's chief operating officer, Tracy Jin, told Reuters that, because of the concentration of tokens, $TRUMP did not meet its usual standards for a full listing on its main board, but the exchange pushed ahead anyway due to strong demand. In a follow-up written statement, an MEXC spokesperson said that a "faster-than-usual" listing was possible because the coin had clear market momentum and it met "our listing standards early." Commenting on the Reuters listing-speed analysis, the spokesperson said market conditions and demand for political meme tokens had changed since 2022, "making direct comparisons less relevant." Bitget also had concerns about the 80% figure, CEO Chen told Reuters. "Eighty percent held by the team, even though there's a little bit of a lock-up period, is in my opinion very risky," said Chen. "Ultimately, user trading volume, demand … overrode the so-called risky factor here." Like some exchanges, Bitget, based in the Seychelles, does not have a business presence in the U.S. or serve clients who reside there, Chen said. "Globally," she added, "people are generally aware of the risks associated with trading meme coins." Upbit, which operates in South Korea, said it does not comment on specific coin listings but that it has "a rigorous and comprehensive evaluation process." 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Meanwhile, bills that sought to expand clean elections, ban corporate contributions to candidates and require more transparency into who is spending in elections all failed. It seems like the one thing that Democrats and Republicans can agree on is keeping the current dysfunctional system in place. – Sen. Rick Bennett (R-Oxford) Clean Elections Maine was a pioneer in public campaign financing but has rejected recent attempts to further expand clean elections. In 2000, Maine became one of two states to implement a clean elections model of campaign finance reform, marking the first time candidates for statewide offices — governor, state senator and state representative — were able to fully fund their campaigns with public money. This session, three separate attempts to expand the program to more offices failed. LD 118, sponsored by Sen. Rick Bennett (R-Oxford) and bipartisan co-sponsors, would have allowed candidates for district attorney and sheriff to participate. 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Baldacci told Maine Morning Star he's interested in introducing a bill in the future that incorporates all three components — popular election, clean elections and ranked-choice voting — but he doesn't see that as an option until the next Legislature, if he is reelected in 2026. Given that the general proposal was already rejected this year, he sees it as unlikely legislative leadership would allow him to introduce the three-pronged approach next year. The budget passed this year provided what has become a typical $3 million allocation for clean elections, however LD 1787 had originally called for increasing funding to $3.5 million, which Cleveland from Democracy Maine described as crucial not only to expand the program but to ensure multiple candidates are able to access the fund each election. 'We're really concerned about the Clean Elections fund not being sustainable,' Cleveland said. 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Who can spend and who knows about it In 2021, Maine passed a law that made several changes to campaign finance law, including banning direct corporate contributions to candidates and leadership PACs, which are controlled by legislators. But lawmakers repealed the law shortly after in 2023, with some supporters arguing it was unfair to businesses and others that the law lacked clarity. This year, LD 1350 attempted to reinstate the part of the law that banned corporate contributions, but it was unanimously rejected by the Veterans and Legal Affairs Committee and both chambers later followed suit. Currently, 23 states completely prohibit corporations from contributing to political campaigns, and federal law prohibits such direct contributions in connection to federal elections. Bennett reintroduced a bill to increase transparency regarding who spends money in elections, but it died again this year, also after being unanimously rejected by the committee. The bill, LD 951, would have required political action committees that receive contributions of at least $10,000 from a single contributor and spend more than $50,000 in Maine elections to disclose the original source of those funds. It was based on a similar law in Arizona. Donors frequently obscure their political activity by giving to a politically oriented nonprofit, which then donates money to a candidate. Ordinarily, campaign disclosure laws would only list the nonprofit as the source of the money. Maine Citizens for Clean Elections supported this measure, with attorney John Brautigam pointing the committee to polls that show Americans of all political persuasions overwhelmingly support disclosure of such donations. But the Maine Education Association, Maine Conservation Voters, Planned Parenthood and other groups were opposed, arguing the requirements in LD 951 go too far and threaten the personal safety contributors. 'It seems like the one thing that Democrats and Republicans can agree on is keeping the current dysfunctional system in place,' Bennett told Maine Morning Star. 'Any one of these things by themselves won't do it, but we do need a different approach.' SUPPORT: YOU MAKE OUR WORK POSSIBLE
Wall Street Journal
an hour ago
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EU Trade Chief to Contact U.S. Officials After 30% Tariff Threat
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