How Salt Lake City's decision to transfer its foreign trade zone authority became 'fortuitous'

KEY TAKEAWAYS

Salt Lake City recently transferred foreign trade zone authority to World Trade Center Utah.
The zone offers duty fee reductions, benefiting Utah's economy, officials say.
The transfer sets the zone up for future expansion, aiding more local businesses amid new tariff uncertainties.

SALT LAKE CITY — When Salt Lake City and World Trade Center Utah officials began negotiating an authority transfer of the city's foreign-trade zone almost two years ago, nobody knew how important it would be by the time the deal was finalized.

However, two years later, those zones could save Utah businesses heaps of cash amid tariff uncertainties, city, state and business leaders said as they celebrated the recent completion of the transfer on Tuesday.

"It truly was fortuitous," said Jonathan Freedman, president and CEO of World Trade Center Utah, looking back on the process.

Salt Lake's foreign trade zone No. 30

Foreign trade zones are designated areas where participating companies can defer, eliminate or reduce duty fees that come from importing goods — including parts, components or materials — "until the merchandise leaves the zone to be consumed in the U.S.," according to Salt Lake's Department of Development. The trade zones are considered an incentive for American manufacturing, giving businesses more stability and opportunities to operate within the designated zones, according to World Trade Center Utah.

"The (foreign trade zone) is a powerful tool ... that fuels economic growth for companies working internationally," Freedman said.

The U.S. opened the door for these zones during the Great Depression in the 1930s, but they didn't start taking off until the past few decades as the manufacturing supply chain became increasingly global. Then-Salt Lake City Mayor Ted Wilson created the city's trade zone near the Northwest Quadrant nearly 50 years ago, making it one of a few dozen in the U.S. at the time. It's now one of hundreds.

Fifteen businesses are operating in the zone, and many more are seeking to join. The zone has allowed these businesses to streamline supply chains and stay competitive in the global market, Salt Lake City Mayor Erin Mendenhall said.

Salt Lake City Mayor Erin Mendenhall speaks about Utah's foreign trade zones during an event at the Salt Lake City-County Building in Salt Lake City on Tuesday. The city transferred authority of its foreign trade zone to World Trade Center Utah late last year, setting it up for expansion in the state. (Photo: Carter Williams, KSL.com)

The city continued to maintain the zone, but it also started to explore shifting authority control. The idea emerged as city leaders began shifting their focus from recruiting external businesses to come to Salt Lake City and instead focused on existing businesses, especially since other organizations were already working on recruitment, Mendenhall said.

"I think it was part of our realization that it would be much better, not only for the businesses there to have a broader statewide reach, but it would consume less of our local resources in the city," she said, adding that the transfer can help more Utah businesses.

U.S. Department of Commerce formally approved the transfer last fall.

Businesses within Salt Lake, Davis, Utah and Morgan counties are eligible to join the zone now, along with a few cities within other counties. Freedman said he'd like to expand the zone statewide so that more businesses can reap the benefits.

"This public-private partnership is going to create a lot of new opportunities. It's not just an administrative change," said Jefferson Moss, executive director of the Utah Governor's Office of Economic Opportunity, adding that he believes it sets the state up to be more innovative.

A 'unique solution'

The timing of the transfer also proved to be serendipitous. Negotiations reached the Salt Lake City Council last year, while members were neck deep in handling numerous other issues.

Salt Lake City Councilwoman Victoria Petro, who served as chairwoman of the City Council while the transfer was negotiated, remembers walking away from the conversations feeling like it could "future-proof" local businesses against unforeseen economic uncertainties based on how it was explained to the City Council.

Then came the tariffs. After returning to office in January, President Donald Trump began raising tariffs on goods imported from many countries outside the United States in an effort to address the country's trade imbalance.

There have been many trade negotiations since then, but tariff rates have also fluctuated back and forth over the last few months, leaving businesses uncertain about the costs associated with importing goods for manufacturing. It was a key theme during Outdoor Retailer last month.

The foreign trade zone can offer more stability, which is vital for many local businesses right now, Mendenhall said. Freedman agrees.

"This is welcome news right now, especially," he said. "This is a unique solution in a time of great uncertainty in businesses. ... Right now, Utah businesses pay hundreds of millions of dollars to the federal government in duties and taxes, and our objective is to keep as much of that capital here, locally, to fuel the growth of our businesses here."

The Key Takeaways for this article were generated with the assistance of large language models and reviewed by our editorial team. The article, itself, is solely human-written.