To amend the Internal Revenue Code of 1986 to impose a tax on United States-bound circumvented cargo through Canada or Mexico and entering the United States.
- Bill Number
- H.R. 3363
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-05-13: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-06-13T08:06:26Z
AI-Generated Summary
Purpose
This legislation aims to impose a new tax on cargo that enters the United States indirectly by first being unloaded in Canada or Mexico, rather than directly at U.S. ports. The goal is to address potential circumvention of U.S. customs processes and generate revenue from such shipments.
Key Provisions
- Tax Imposition: A tax is levied on "United States-bound circumvented cargo," defined as goods unloaded from ocean-going vessels in Canada or Mexico and then transported into the U.S. via rail, highway, airport, or inland port. This includes cargo that remains intact or is modified, assembled, or consolidated in Canada or Mexico.
- Tax Rate: The tax equals 0.125% (one-eighth of one percent) of the cargo's value, as determined under U.S. customs laws.
- Payment Responsibility: The importer of the cargo is liable for paying the tax at the time the goods enter the U.S.
- Administration: The U.S. Secretary of the Treasury (through the IRS) will issue regulations for tax collection, compliance procedures, and penalties for non-payment.
- Effective Date: The tax applies to cargo entering the U.S. after December 31, 2025.
Significant Changes to Existing Law
- Amends Chapter 36 of Subtitle D of the Internal Revenue Code of 1986 by adding a new Subchapter G titled "Cargo Circumvention Tax," including Section 4499.
- Introduces a novel excise tax specifically targeting indirect cargo routes through neighboring countries, which does not exist in current law. This expands the scope of certain excise taxes (typically on goods like fuel or communications) to include international trade circumvention.
Potential Impacts
- On Government Agencies: The IRS and U.S. Customs and Border Protection will need to implement new collection and enforcement mechanisms, potentially increasing administrative workload and generating additional federal revenue from trade activities.
- On Citizens and Businesses: U.S. importers and businesses relying on cross-border supply chains may face higher costs, which could raise prices for goods and affect industries like manufacturing, retail, and logistics.
- On International Relations: Could strain trade ties with Canada and Mexico by discouraging the use of their ports as transit points, potentially impacting North American supply chains under agreements like the USMCA (United States-Mexico-Canada Agreement).
Main Stakeholders Affected
- Importers and Businesses: Primary payers of the tax, including U.S. companies importing goods via Canada or Mexico.
- Shipping and Logistics Companies: Firms operating ocean vessels, rail, highway, or air transport across borders, who may need to adjust routes or pass costs to customers.
- U.S. Government: Benefits from revenue but incurs costs for enforcement; agencies like the IRS and Customs will handle implementation.
- Canadian and Mexican Ports/Authorities: May see reduced cargo volume, affecting their economies and bilateral trade dynamics.
- Consumers: Indirectly impacted through potential increases in the cost of imported goods.
Notable Legal, Constitutional, or Political Implications
- Legal: Establishes a targeted excise tax under the Internal Revenue Code, which Congress has broad authority to impose under Article I, Section 8 of the U.S. Constitution (power to lay and collect taxes). However, it may invite challenges if viewed as discriminatory against specific trade routes, potentially under international trade rules like those of the World Trade Organization (WTO).
- Constitutional: Aligns with federal taxing power but could raise questions about uniformity in taxation if it disproportionately affects certain border states or industries.
- Political: As a bill introduced in the 119th Congress (2025-2026), it reflects concerns over port congestion and trade fairness; passage could signal a push for stronger border controls, though it might face opposition from free-trade advocates or border-state representatives.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2025-05-13: Referred to the House Committee on Ways and Means.
- 2025-05-13: Introduced in House
- 2025-05-13: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to impose a tax on United States-bound circumvented cargo through Canada or Mexico and entering the United States. — issued 2025-05-13 — PDF (3 pages)