Against the backdrop of the most recent interventions by the U.S. administration, the so-called “port war” between the United States and Canada is entering a new phase. Statements by senior officials and Commissioners of the U.S. maritime regulatory authority are bringing back to the forefront an issue that, until recently, remained on the margins of technical detail: the tax “loophole” that allows cargo to enter the U.S. via Canadian ports without paying the U.S. Harbor Maintenance Tax (HMT).
The land bridge loophole under scrutiny
Washington no longer hides the fact that it considers the issue a threat to its economy and maritime base. At the center lies Article 6 of the Executive Order on “Restoring America’s Maritime Dominance,” which explicitly provides for the closure of the so-called “land bridge loophole.” This is a policy choice with a clear message: commercial flows destined for the U.S. market should be subject to the same rules, regardless of the port of entry.
In practice, the problem concerns the way the HMT operates. The tax is imposed on cargo moving through U.S. ports and finances the maintenance and upgrading of port infrastructure. However, when cargo is unloaded at a Canadian port and enters the U.S. via land borders, the tax is not paid. The result is a clear cost advantage for Canadian ports, which translates into loss of cargo, revenues, and jobs for the United States.
Canada’s port strategy and U.S. concerns
This advantage did not emerge by chance. Over the past twenty years, Canada systematically invested in the development of port infrastructure, with significant state funding. It created capacity that far exceeds the needs of the domestic market, with a clear objective of serving cargo with the United States as its final destination. According to U.S. estimates, the port capacity that has been developed is almost double what is required for Canadian trade.
For the U.S. side, this situation does not merely constitute intense competition. It is considered a market distortion, as it is based on an institutional gap rather than on genuine efficiency advantages. The consequences are measurable: reduced revenues for funds that support maritime policy, pressure on U.S. ports, and loss of jobs among dockworkers, transport operators, and related sectors.
Strategic stakes and the next phase
The issue has officially concerned U.S. authorities for years. A 2012 study by the Federal Maritime Commission showed that if Canada’s advantage with respect to the HMT were eliminated, up to 50% of the containers entering Canadian West Coast ports with the U.S. as their destination could return to U.S. ports. A similar picture is also emerging in Mexican ports, which in recent years have been capturing a growing share of cargo bound for the U.S. market.
The current context gives the issue particular weight. In Canada and Mexico, new large port projects are being planned or implemented, which rely to a great extent on the handling of U.S.-bound cargo. U.S. circles warn that the full implementation of Article 6 will remove the core economic advantage of these investments, calling their viability into question.
For the United States, the stakes are strategic. The discussion is not only about a tax, but about whether the country will retain control over the main gateways of its trade. For Canada, in turn, this development threatens a port development model that was built on privileged access to the U.S. market.
The U.S.–Canada “port war” is not being waged with tariffs or trade sanctions. It is being waged through tax rules, regulatory interventions, and investment choices. In a period of heightened geoeconomic competition, control of port corridors is equivalent to control of trade flows. And this conflict has just entered its most critical phase.