Bangor leaders are touting a revived tool that could help local businesses weather the financial uncertainty that tariffs enacted by the Trump administration have had on needed materials.
Bangor oversees one of four Foreign Trade Zones in the state. A Foreign Trade Zone is a secure, designated area that’s considered outside the U.S. Customs territory, but still under Customs supervision, according to Biguita Hernandez-Smith, Bangor’s economic development officer.
Help us raise $40,000 to fund the BDN’s civic news mission this spring. Learn why we are asking and how to give.
This means companies given Foreign Trade Zone status can import products from other countries and not pay a tariff until it leaves the zone to be sold, Hernandez-Smith said.
Businesses can store, manufacture, assemble or test goods in a Foreign Trade Zone and duties — an amount of money charged on imported and exported goods — are also reduced, deferred or eliminated altogether depending on how a product is used.
“If you import something into Bangor and that product stays in the Foreign Trade Zone for three months, gets assembled into another product and then it gets shipped to Canada, it’s not incurring a duty at all,” Hernandez-Smith said.
While Bangor’s Foreign Trade Zone isn’t new, it hasn’t been active for more than 20 years, Hernandez-Smith said. When she began working for the city roughly a year ago, one of her primary goals was to restart the Foreign Trade Zone and encourage businesses to join it by explaining its benefits.
No companies had joined Bangor’s Foreign Trade Zone as of Monday, but city officials believe the tool could help them deal with tariffs for the first time while also navigating an especially turbulent economic climate.
While tariffs for businesses in a Foreign Trade Zone aren’t eliminated entirely, Hernandez-Smith said delaying the fees allows businesses to direct cash to other uses that could grow the business, such as hiring new staff.
For example, if a local brewery within the Foreign Trade Zone imports aluminum cans from Canada, the company wouldn’t pay a tariff on the aluminum until the cans have been filled, sold and sent out.
Prentiss Swett, co-owner of Marsh Island Brewing, said on Wednesday that hadn’t heard of the Foreign Trade Zone, but the concept seemed potentially beneficial as the brewery is dealing with rising costs on aluminium cans.
However, Swett had several questions on how the Zone operates and wanted to know more before joining.
Bangor’s Foreign Trade Zone isn’t a physical place and businesses don’t have to be in Bangor to get the benefits, Hernandez-Smith said.
Bangor’s zone operates under an “alternate site model,” meaning that companies within Penobscot, Hancock, Piscatatiquis, Waldo and Washington counties are eligible to join the Zone, Hernandez-Smith said.
“Oftentimes when people hear of a Foreign Trade Zone, they think of some warehouse where their goods can be imported into, but that’s not the case with our model,” Hernandez-Smith said.
This means that a company’s existing site where they store and manufacture products can be given Foreign Trade Zone status and get the same benefits on goods they import, as long as the location meets other standards and requirements set by U.S. Customs.
Businesses will need to pay a “nominal” fee to join the Foreign Trade Zone, but the fee amounts haven’t been set yet, Hernandez-Smith said.
Hernandez-Smith is encouraging businesses interested in joining the Foreign Trade Zone to contact the city’s Community and Economic Development Office.
