Trade, Tariffs, and Compliance in the Electronics Industry

Understanding Foreign-Trade Zones (FTZ) and Digi-Key’s Accomplishment

Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. They are usually located in or near CBP ports of entry and are known as the United States' version of free-trade zones.

We had the opportunity to chat with Teri Ivaniszyn, VP of Operational Excellence and Trade Compliance at Digi-Key, to learn more about her accomplishment of establishing the largest FTZ. According to Ivaniszyn, the largest Foreign Trade Zone is calculated based on the number of packages and what's shipped out. Unlike other FTZs traditionally set up for large carriers by sea or train, Digi-Key ships out one box at a time—an approach that was a new challenge for both the government and carriers.

"The thing with Digi-Key is we're shipping out one box at a time. One box here. One box there, which has made it very difficult to get set up because they were used to the big containers," said Ivaniszyn. This process of shipping single line items was very different for the government and for the carriers. It's been quite a learning process for the Digi-Key team and challenging to execute. (Not even Amazon has an FTZ that ships small packages!)

With the rise of tariffs, Digi-Key's FTZ helps the company defer duties, taxes, and tariffs, ensuring there is no liability on the shelves. This benefits customers and suppliers alike, reducing their costs and eliminating tariff charges for Digi-Key's international customers.

Want to hear more? Listen in to the full episode to learn more about FTZs and how Digi-Key is leading the way with innovative shipping strategies.