We Need To Close This Costly Loophole, Newhouse Says

On Tuesday, Central Washington’s Dan Newhouse introduced legislation he said would close a loophole exploited by foreign shippers who circumvent United States seaports and divert cargo to Canada and Mexico to avoid paying the U.S. harbor maintenance tax (HMT).  The fee would be 0.125% of the value, equal to the HMT, of U.S.-bound cargo that is discharged from an ocean-going vessel in Canada or Mexico and subsequently enters the U.S.

"We have an opportunity to expand the United States’ position as a leader in global trade, and we can only achieve that by strengthening and modernizing our port infrastructure." Newhouse said. "Foreign shippers have been circumventing U.S. seaports, especially on the west coast, in order to avoid paying the harbor maintenance tax, resulting in a depleted maintenance fund. My legislation eliminates this costly loophole, ensures foreign shippers are paying their fair share, and strengthens our seaport infrastructure to deliver goods to consumers more efficiently."

Current System Costing U.S. Ports Millions

The fee would be 0.125% of the value, equal to the HMT, of U.S.-bound cargo that is discharged from an ocean-going vessel in Canada or Mexico and subsequently enters the U.S.  The U.S. Harbor Maintenance Trust Fund reported it had lost nearly $600 million in revenue over the last ten years due to imports that avoided the HMT by moving through a Canadian or Mexican seaport before entering the U.S.  The HMT is an ad valorem tax that funds Army Corps of Engineers (USACE) activities to maintain U.S. seaports. U.S.-bound cargo from overseas trading partners that arrives at Canadian or Mexican ports and then enters the U.S. is not subject to paying the HMT. 

Bringing these circumvented imports back to U.S. ports is critical for USACE’s duty to keep America’s harbors and rivers maintained and support economic growth, Newhouse noted. 

Industry Supports Newhouse's Bill

Toshiko Hasegawa, Northwest Seaport Alliance Co-Chair and Port of Seattle Commission President, said, "For decades, the Harbor Maintenance Tax has created a competitive disadvantage for U.S. ports like Seattle and Tacoma to other ports in North America. We are deeply grateful for Congressman Newhouse’s leadership in championing this issue and introducing this legislation to level the playing field by eliminating the incentive to divert U.S.-bound cargo through non-U.S. ports." 

John McCarthy, Northwest Seaport Alliance Co-Chair and Port of Tacoma Commission President, said, "Washington is one of the most trade-dependent states in the nation, and maintaining the NWSA’s position as a competitive, top-tier cargo gateway is critical to providing market access to agricultural producers. We thank Congressman Newhouse for working to uphold a strong, competitive supply chain by ensuring taxes are applied fairly to all US-bound cargo regardless of port of entry." 

Uffe Ostergaard, CEO of Carrix, said, "For over 30 years, Pacific Northwest ports have been disadvantaged by the Harbor Maintenance Tax, which has made these U.S. ports less competitive and has driven cargo volumes to alternative gateways. We are grateful to Congressman Newhouse for his leadership on this critical legislation to provide a more level playing field, support U.S. jobs, and bolster key export communities in Washington State." 

Click Here to read the bill in its entirety.

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