OTTAWA — The Trump administration plans to shut what it calls a loophole that lets shippers avoid taxes on overseas cargo destined for the U.S. by moving goods through Canada and Mexico.

Whatever the White House does could have consequences for Canada’s sea terminals, which American regulators warn have been attracting an outsized share of U.S. business from shippers looking for a cheaper place to unload their wares.

The U.S. Harbor Maintenance Tax, which adds a charge of 0.125 per cent to the value of commercial cargo imports, funds the dredging and maintenance of U.S. federal shipping channels. It does not apply when those goods enter the United States by truck or rail through land borders with Mexico and Canada, which have port fees but not the same level of taxes.

The U.S. government has long been concerned that the tax puts American ports at a disadvantage. In 2012, the country’s ocean transport regulator, the Federal Maritime Commission, published a report that cited tax avoidance among “numerous factors” that would prompt shippers to route U.S.-bound cargo through Canadian or Mexican ports. However, the report made clear ocean carriers were not violating U.S. law or regulations by doing business this way.

That was then. On April 9, 2025, President Donald Trump signed an executive order instructing Homeland Security to propose legislation ensuring overseas cargo arriving overland from Canada or Mexico is assessed for applicable duties, taxes and fees, including the Harbor Maintenance Tax. Trump’s order also proposed an extra 10 per cent service fee. 

When asked whether Ottawa has raised the issue with the White House, Jean-Sébastien Comeau, a spokesperson for Canada-U.S. Trade Minister Dominic LeBlanc, declined to comment.

Last month, Laura DiBella, chair of the U.S. maritime commission, and fellow commissioner Max Vekich issued a joint statement confirming the Trump administration was moving ahead. “Doing so will stanch 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,” they wrote on Jan. 21.

“Ports in Canada have been capturing market share at our nation’s expense for almost two decades,” said DiBella and Vekich’s statement, which was not issued on behalf of the full commission. “They 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.”

The statement added: “Importantly, 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.”

DiBella and Vekich did not single out any Canadian ports, but the U.S. commission has long tracked the increase of shipments from the Port of Prince Rupert, B.C., which a 2014 update to the previous study identified as the fastest-growing port in North America.

The Prince Rupert Port Authority handled 26.3 million tonnes of cargo last year—an increase of 14 per cent over 2024. The number of containers that moved through the ship-to-rail Fairview Container Terminal operated by DP World rose by 20 per cent year-over-year in 2025, which the port authority said was driven by “robust volumes” in the second half of the year.

Historically, about two-thirds of the containers head from Prince Rupert to the U.S. Midwest. CN Rail, which serves the terminal, boasts of being able to deliver goods from Shanghai to Chicago within 16 days by using Prince Rupert, which it says is 68 hours closer to China than Los Angeles.

The 2012 report by the U.S. maritime commission identified the port as a major competitor to its U.S. counterparts, especially given its specialization in dock-to-rail transport. The study noted that the number of U.S.-bound containers from Canadian ports had been declining until Prince Rupert opened in 2007, at which point it began to rise. Meanwhile, the use of Canadian ports for U.S. exports, where the Harbor Maintenance Tax does not apply, had continued to fall.

The Prince Rupert Port Authority declined The Logic’s request for an interview. “This is not one we’re comfortable commenting on at this time,” wrote spokesperson James Cain in an email. So did Montreal’s authority. “We do not comment on decisions made by foreign governments,” wrote spokesperson Evelyne Déry. In Halifax, no one was available.

The Vancouver Fraser Port Authority said “a relatively small share of overall container volumes” that move through its terminals is headed to the U.S. “Our recent growth has been driven primarily by strong Canadian market demand,” wrote spokesperson Sarah Matak.  “We will continue to monitor the situation in the U.S.—which remains both fluid and uncertain—and are in regular conversations with our industry and supply chain partners to ensure we can continue to meet Canadian trade needs.”

Craig Bell Estabrooks, CEO of the Port of Saint John, told The Logic last month that most of the cargo arriving in New Brunswick is destined for the Canadian market. Still, he said, uncertainty about what the Trump administration will do is concerning. “Customers get nervous,” he said in an interview while in Ottawa to promote trade with Ontario. “We can comfort folks and tell them that the gateway is open and things are operating as normal.”