HR 3363119th CongressIntroduced

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.

Introduced: May 13, 2025

Economy & Taxes

Standard Summary

Comprehensive overview in 1-2 paragraphs

This bill creates a new internal revenue tax aimed at shipments that enter the United States after being discharged in Canada or Mexico and then moving into the U.S. by land, rail, air, or inland port. It establishes a cargo circumvention tax of 0.125% of the cargo’s value (as determined for customs purposes) and requires the importer to pay it at the time of U.S. entry. The tax applies to cargo that is discharged in Canada or Mexico and subsequently enters the U.S., including cargo that is intact, intermodal, or that has been modified, assembled, or consolidated in Canada or Mexico. The bill directs the Treasury to issue regulations and penalties for noncompliance and makes a clerical amendment to add a new Subchapter G to the Code. The effective date specifies that the amendments apply to cargo entering the United States after December 31, 2025 (i.e., starting in 2026).

Key Points

1Important provision 1: Establishes a new Subchapter G—Cargo Circumen tion Tax—in the Internal Revenue Code, adding Sec. 4499.
2Important provision 2: Tax rate is 0.125% of the value of the United States-bound circumvented cargo, with value determined under U.S. customs laws.
3Important provision 3: Liability for the tax falls on the importer of the cargo entering the United States; the tax is collected at the time of entry.
4Important provision 4: Defines United States-bound circumvented cargo as cargo discharged in Canada or Mexico and then entering the U.S. by rail, highway, airport, or inland port, including cargo that is intact, intermodal, or modified/assembled/consolidated in Canada or Mexico.
5Important provision 5: Requires the Secretary to issue regulations or guidance to administer collection and penalties; includes a clerical amendment to insert Subchapter G into the table of subchapters; and sets the effective date for cargo entering after December 31, 2025.

Impact Areas

Primary group/area affected: Importers of cargo bound for the United States that transits through Canada or Mexico, including those who modify or assemble goods in those countries; U.S. customs brokers and freight forwarders involved in such shipments.Secondary group/area affected: Carriers and shippers operating cross-border routes through Canada or Mexico; intermodal and logistics providers; industries that rely on cross-border supply chains (manufacturing, retail, etc.).Additional impacts: Potential effects on cross-border trade patterns and logistics costs; implementation and compliance costs for businesses to calculate and remit the tax; potential new revenue for the federal government, and new regulatory and enforcement activities by the Treasury/IRS.The bill is introduced in the 119th Congress and specifies that the tax applies to cargo entering the U.S. after December 31, 2025, meaning shipments beginning in 2026 would be subject to the tax if they meet the definition of “United States-bound circumvented cargo.”The text defines “circumvented cargo” with particular emphasis on cross-border routing through Canada or Mexico and includes modifications or consolidations performed in those countries.

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