BROOMFIELD — Colorful spools of thread made and imported from Germany will soon leave this Broomfield warehouse and head to Mexico, skipping any payment of U.S. tariffs.
It’s not a random loophole. Part of Amann USA’s facility is located in a Foreign Trade Zone, a property designation that allows manufacturers to defer import taxes until a product is finished or to bypass taxes completely if the facility is merely a passthrough to another country.
It’s also one way Colorado companies are adjusting to the financial hurt of an ongoing global trade war that goes beyond China, which the Trump administration targeted by increasing tariffs on Chinese imports to 25 percent on May 10. The negative impacts on local businesses range from the outdoor industry to aerospace firms, farmers to tech manufacturers. Some are shifting production out of China. Others pre-ordered goods before new tariffs kicked in.
Amann has used the Foreign Trade Zone to expand into the automotive industry, where its customers buy thread for seat cushions and seat belts made in their factories in Mexico.
“If we imported (to the U.S.), we would have to pay 11.4 percent duties on everything that came from Germany,” said Cherri Brown, a buyer at Amann. “Of course, China is more. Before it went up the first time, it was 11.4 percent, then it was raised 10 percent (in 2018) and now it’s 25 percent. That’s 36.4 percent. There’s nothing we can really do. …We’re just hoping everything levels out.”
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