A "Liberation Day" Workaround?
Trump's tariff plan is driving interest in U.S Foreign Trade Zones
I let this newsletter languish for a while for two reasons. The main one was pictures: it often takes me longer to figure out images than to write posts. I’m solving this problem by going picture-free. If you’d like to be my photo editor, let’s talk. Until then, please enjoy my words.
My second excuse for posting infrequently is that I don’t like to be repetitious. Then, I was reminded by my friend Mark Greif that it’s okay for journalists to peddle the same story a dozen times, because it’s the only way to do it and frankly, no-one cares.
To that end, I wanted to call your attention once again to Foreign Trade Zones, a quirk in US customs law that’s suddenly become more appealing in light of “Liberation Day”—aka, Trump’s tariffs—that may (or may not?) take place tomorrow.
For newbies, FTZs are carveouts where tariffs temporarily or conditionally don’t apply. I wrote about them for this newsletter after watching Tenet a couple of years ago. Apparently, trade jargon can help you make sense of Christopher Nolan movies when nothing else can.
FTZs exist all around the world in different configurations—warehouses, fenced-off areas, office parks, actual ports—and they are mostly uncontroversial, like globalist IKEA. As it so happens, the Swedish company participated in a for-profit initiative to employ Syrian refugees in a Jordanian special economic zone that was granted special EU import concessions in exchange for said employment. The results were not particularly inspiring.
In the US, these special areas (of which there are hundreds around the country) let companies either store imported products without paying customs fees, or allow them to manufacture products they can later import, perhaps at a lower charge. They’re a nice little hack for companies dealing in foreign goods they don’t immediately need to offload.
So it’s not surprising that the companies operating these zones are suddenly being inundated with calls from businesses that see them as a potential workaround for Trump’s impending tariffs. Even the industry’s trade conference in May is looking at record attendance. I want to go!
“Trump’s more rapid rollout of trade restrictions through executive orders is prompting businesses to seek ‘more flexibility and control’ by stockpiling goods at risk of being caught,” writes Oliver Telling in the FT. “These goods included car parts, pharmaceutical products and air conditioning units, the executive said.”
“Ahead of the ‘liberation day’ tariffs, one logistics executive said he was ‘confident that [carmakers] will be assessing’ whether they can get authorisation to manufacture in foreign trade zone” Telling goes on, concluding that a zone boom (or boomlet) may well be ahead. (Special thanks to David Smith for sending me the link!)
It sounds like these stockpiling plans are tentative at best—the way he’s carrying on, little would stop Trump from altering the rules of FTZs if he didn’t like what went on in them. But the resurgence of interest in them makes sense given how hairy things are out there, and also how FTZs began in the first place.
The legislation that established them came out of the ultra-protectionist Smoot-Hawley tariffs, which battered American trade nearly a century ago. Back in 2018, I made a short radio segment for Marketplace on the old tariffs and the appeal of FTZs with Dara Orenstein, the author of a great book on the subject whose other work inspired one of my book chapters. As she put it: “Protectionism is great for business for foreign trade zones.”
The tariff-to-zone pipeline is a pretty good example of my concept of “national globalism.” It squares with what I think will happen in the years ahead: Trump will bring offshore back onshore without undoing all the damage that offshore has wrought.
It also shows how nationalism creates new, weird and mutant forms of globalism—sometimes in your own backyard!
On a different topic, I laughed out loud at this post. I’m assuming it’s an April Fool’s joke, but if it’s not, I might have to organize a new family vacation. Taiwan to Prospera is one hell of a journey…
This is a fascinating unpacking of how the arcane world of trade logistics intersects with the more headline-grabbing politics of tariffs and nationalism. I really appreciate how you trace the historical roots of FTZs to Smoot-Hawley and connect it to today’s "Liberation Day" moment—it underscores how these economic tools outlast the ideologies that created them, mutating into instruments of convenience, exploitation, or survival depending on who’s using them. Your concept of “national globalism” is especially sharp; it captures the paradox of a world where economic sovereignty increasingly relies on technocratic loopholes. Can’t help but wonder if FTZs are becoming the new terrain of soft power—less visible than sanctions or summits, but just as strategic.
From stories I've written on FTZs over the years, some of the most interesting details to be gleaned from the FTZ Board's website are from those operations approved for FTZ status under the "alternative site framework," essentially a workaround of a workaround that allows FTZ status to be conferred, say, beyond the immediate physical boundaries of a given port authority (as I have understood it). Perhaps ASF is discussed in your book, Atossa. I am only on p. 15 and there is no index to allow me to deviate from a complete front-to-back reading! Your writing is (as Alan Alda would say) clear and vivid, so that makes the reading a pleasure.