Two FMC Commissioners applaud Administration action to close Harbor Maintenance Fee loophole

Federal Maritime Commissioners Max Vekich and Laura DiBella are commendig the Administration for taking steps to close land border tax loopholes that Canada and Mexico have been using to redirect supply chains away from U.S. ports and that enable shippers to avoid Harbor Maintenance Fee payments

They say that implementing Section 6 of President Trump’s April 2025 Executive Order on Restoring America’s Maritime Dominance would go a long way to promote U.S. interests while ensuring a level playing field for U.S. ports.

Section 6 states:

Sec. 6. Enforce Collection of Harbor Maintenance Fee and Other Charges. In order to prevent cargo carriers from circumventing the Harbor Maintenance Fee (HMF) on imported goods through the practice of making port in Canada or Mexico and sending their cargo into the United States through land borders, and to ensure the collection of other charges as applicable, the Secretary of Homeland Security shall take all necessary steps, including proposing new legislation, as permitted by law to:
(a) require all foreign-origin cargo arriving by vessel to clear the Customs and Border Protection (CBP) entry process at a United States port of entry for security and collection of all applicable duties, customs, taxes, fees, interest, and other charges; and
(b) ensure any foreign-origin cargo first arriving by vessel to North America clearing the CBP process at an inland location from the country of land transit (Canada or Mexico) is assessed applicable customs, duties, taxes, fees (including the HMF), interest, and other charges plus a 10 percent service fee for additional costs to the CBP, so long as the cargo being shipped into the United States is not substantially transformed from its condition at the time of arrival into the country of land transit (with the discretion for such decisions to be det

“The situation today is urgent as new Canadian and Mexican port development projects are planned, and these projects could result in the closure of port terminals in the U.S.,” say the two commissioners. “”Implementation of Section 6 would eliminate the artificial cost advantage that is undermining our economy and helping to justify these projects.

The commissioners say that ports in Canada have have leveraged substantial government-provided investment to build infrastructure to handle U.S. cargo and have built twice the port capacity necessary to serve the Canadian domestic market. They say that Canada has also benefited from loopholes in U.S. tax law to offer a lower cost alternative to U.S. shippers: Cargo shipped through ports in Canada and Mexico and then into the U.S. over land borders can avoid taxes assessed at U.S. ports, including the Harbor Maintenance Tax (HMT).

In addition to the loss of revenues into the trust funds that support the maritime industry, say the commissioners, this land border loophole also has been financially significant enough to drive shippers to avoid U.S. ports. In 2012 the Federal Maritime Commission (FMC) undertook a study on the role of the HMT in the diversion of U.S. cargo to non-U.S. ports. The FMC found that if Canada’s HMT advantage were eliminated, up to half of the U.S.-bound containers coming into Canada’s West Coast ports might revert to using U.S. ports. The same dynamic applies to Mexican ports, which also have been increasingly attracting cargo that otherwise would go through U.S. ports.

“We look forward to implementation of Section 6 to fully close the land border loophole,” say the commissioners, adding that this “will staunch the bleeding of maritime jobs to Canada and Mexico and create new employment opportunities for U.S. longshore workers, truck drivers and others and provide the U.S. maritime industry a much-needed boost.”

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