ProcurementAnalysis

US foreign-trade zones group pushes Congress to end USMCA export duty

US zone manufacturers can owe duty on goods made with USMCA drawback merchandise exported to Mexico or Canada. Two bills would end that; both sit in committee.

By Divyansh Anand SinghAboutEditorial policyContactPublished 9 Nov 2026, 3:16 AM IST3 min readSource: FreightWaves

In 60 words

US manufacturers in foreign-trade zones can owe US duty on goods made with merchandise subject to USMCA drawback when they export to Mexico or Canada, even if the goods meet USMCA origin rules. The National Association of Foreign-Trade Zones backs two bills to remove the charge. Both remain in committee, so buyers should price the duty into site decisions.

Key points

Zone operations received $963.8 billion of merchandise in 2024, while exports from the zones fell 10.3% to $133.5 billion¹.
19 U.S.C. 81c requires a duty on merchandise made in a zone from goods subject to USMCA drawback before it is exported to Mexico or Canada².
H.R. 6792 would create a duty-free tariff line, 9801.00.95, for such exports; the Senate companion, S. 4793, is still in committee^3, 4.
Privileged foreign status moves the duty point to admission and cannot be abandoned later⁵.

US manufacturers that make goods in foreign-trade zones can be required to pay US duty on imported components, even when the finished product qualifies for USMCA preference and is exported to Mexico or Canada¹. The National Association of Foreign-Trade Zones (NAFTZ) is pressing Congress to remove that charge and says the fix should not wait for the USMCA joint review¹.

"One of the most significant competitive disadvantages facing U.S. FTZ manufacturers involve the treatment of goods exported to Canada and Mexico under USMCA," NAFTZ president Jeff Tafel said¹.

The duty that survives a USMCA claim

The charge comes from the Foreign Trade Zones Act. Under 19 U.S.C. 81c, the rule covers merchandise that consists of goods subject to USMCA drawback². If that merchandise is manufactured or changed in condition in a zone, it cannot be exported to Mexico or Canada without a duty assessed on it at export². If the importer had requested privileged foreign status, the duty is assessed at admission instead². Payment is due before the 61st day after export².

The duty can be waived or reduced if the exporter shows duties paid or owed to the USMCA country. The reduction is capped at the lesser of the US duties paid or owed on importation or the duties paid to that country².

Tafel said Mexican and Canadian manufacturers can use duty-relief programs that remove comparable costs¹. "The result is an uneven playing field," he said¹.

Two bills, both in committee

NAFTZ backs H.R. 6792, introduced by Representative Lance Gooden on December 17, 2025 and referred to the Ways and Means Committee^6, 3. The text adds a new tariff line, 9801.00.95, for merchandise admitted to a zone, manufactured or changed there, then withdrawn for direct export to Mexico or Canada³. Such articles would enter free of duty, including duty on their components³. CBP would have 90 days after enactment to issue rules³.

Senator Tim Scott introduced the companion, S. 4793, on June 16, 2026, and it was referred to the Finance Committee⁴. Neither bill has advanced beyond committee referral, and the duty still applies^6, 4, 1.

Tafel said lawmakers should act before the USMCA review finishes. "American manufacturers shouldn't have to wait for that process to conclude before this longstanding competitive disadvantage is addressed," he said¹.

Zones handle $963.8 billion of merchandise

Zone operations received $963.8 billion of merchandise in 2024, up from $948.8 billion in 2023, according to the Foreign-Trade Zones Board's 2024 Annual Report to Congress¹. Exports fell to $133.5 billion from $148.8 billion, a drop of 10.3%¹. The program supported nearly 543,000 jobs across about 1,300 active operations, including 381 production operations¹. Texas ranked first for both merchandise received and exports¹.

Production operations took about 61% of merchandise received in 2024¹. Tafel said some recent tariff actions require imported goods to enter zones under privileged foreign status, which can limit the usual duty benefits¹. Under customs rules, privileged foreign merchandise is classified and valued when it is admitted, and the status cannot be abandoned later⁵.

Companies weigh cross-border location decisions

Tafel said zone operators hear from companies reviewing sourcing, freight volumes, warehousing and transport patterns, and whether to move manufacturing or distribution across the border¹. He said those talks do not always lead to changes, but uncertainty is shaping where companies place their next large investment¹.

Border investment continues on its own track. Ametek plans to invest $25 million to expand in Reynosa and Nuevo Laredo, adding 650 jobs, the Tamaulipas Ministry of Economy said on November 5¹. The plan adds 400 jobs in Reynosa and 250 in Nuevo Laredo¹.

What to check in your next sourcing review

Do not put the bills in a 2027 budget. Both are proposals at committee stage^6, 4.
Price the export duty for any US zone site shipping to Mexico or Canada, and find out whether it falls on the article or on components².
Ask the zone operator and the broker which admission status your parts use, because privileged foreign status moves the duty point to admission^5, 1.
Check who holds the evidence for a waiver, and whether duty paid or owed to Mexico or Canada can reduce the US charge within the 61-day window².
Compare the US zone case with the duty-relief programs Mexican and Canadian producers use¹.

USMCA preference and US duty relief are two different questions in this case². Until Congress acts, buyers should treat them separately in site selection and in supplier quotes¹.

What it means for procurement buyers

The duty does not disappear when a good qualifies for USMCA. For a buyer placing production in a US foreign-trade zone to serve Mexico or Canada, the export duty is a cost line, assessed on the merchandise at export and payable within 61 days². Buyers comparing a US zone site with a Mexican or Canadian site should assume the charge stays until a bill becomes law^6, 4.

Who carries it matters as much as the amount. The duty is assessed at export and must be paid before the 61st day, so the contract needs to say who bears it and who keeps the waiver evidence². Get that into the quote.

Supplier risk follows the same logic. NAFTZ says companies are weighing sourcing, warehousing and relocation, and that uncertainty is affecting where they place the next large investment¹. A supplier that shifts capacity changes your lead time and your customs footprint.

Before the next sourcing review, model the duty into landed cost for each site, confirm the admission status used for your parts, and treat the two bills and the USMCA review as watch items, not budget lines^5, 1.

Sources

1.FreightWaves, Borderlands Mexico: US foreign-trade zones push to fix USMCA tariff obstacles, 8 November 2026. Accessed 9 November 2026.
2.LII / Legal Information Institute, 19 U.S. Code § 81c - Exemption from customs laws of merchandise brought into foreign trade zone. Accessed 9 November 2026.
3.govinfo.gov, https://www.govinfo.gov/content/pkg/BILLS-119hr6792ih/html/BILLS-119hr6792ih.htm. Accessed 9 November 2026.
4.govinfo.gov, S. 4793 (IS) - Foreign-Trade Zone Export Enhancement Act of 2026. Accessed 9 November 2026.
5.ecfr.gov, 19 CFR 146.41 -- Privileged foreign status.. Accessed 9 November 2026.
6.govinfo.gov, H.R. 6792 (IH) - Foreign-Trade Zone Export Enhancement Act of 2025. Accessed 9 November 2026.

How this story was made: published under Divyansh Anand Singh's byline, researched and drafted with AI tools working only from the sources listed above. Automated checks confirmed that every number and quote appears in those sources, and a separate AI fact-check compared the story with them before publication. Read our editorial policy. Spotted a mistake? Tell us and we will fix it.

foreign-trade zones
usmca
us customs
duty drawback
nearshoring
landed cost