S-4793-119
Read twice and referred to the Committee on Finance.
Sponsored by Tim Scott (R-SC)
What it does
This bill would amend the Foreign Trade Zones Act and the Harmonized Tariff Schedule to allow merchandise that enters a U.S. foreign-trade zone (FTZ), is manufactured or changed there, and is then exported directly to Canada or Mexico to leave duty-free. It would create a new tariff classification (heading 9801.00.95) for such goods and require U.S. Customs and Border Protection to issue implementing regulations within 90 days of enactment.
Who benefits
U.S. manufacturers and distributors operating inside foreign-trade zones, particularly those in export-oriented industries such as automotive, aerospace, electronics, and chemicals. Companies that source components from Canada or Mexico under USMCA and re-export finished goods back to those countries. Workers employed at FTZ facilities, especially in manufacturing-heavy states. Businesses in port cities and industrial corridors where FTZs are concentrated. Importers of components who currently face duty deferral restrictions that limit their ability to export competitively.
Who is hurt
Domestic manufacturers operating outside FTZs who compete with FTZ-based producers and would not receive the same duty advantage, potentially facing a competitive disadvantage. U.S. Treasury would forgo tariff revenue on goods that would otherwise be subject to duties. Domestic suppliers of components who may face increased competition from foreign-sourced components processed in FTZs. CBP would bear administrative costs of drafting and enforcing new regulations within the 90-day window.
Supporters argue
Supporters argue that current USMCA duty deferral restrictions create an unintended penalty on FTZ operators who manufacture goods for export to Canada and Mexico, undermining the original purpose of FTZs — to boost U.S. competitiveness and preserve domestic jobs. They contend that the bill corrects a legal ambiguity that discourages investment in U.S. FTZ facilities, and that duty-free treatment for re-exported manufactured goods is consistent with the broader USMCA framework, which is designed to promote North American supply chain integration.
Opponents argue
Opponents argue that extending duty-free treatment to FTZ-processed goods exported under USMCA could create a loophole allowing foreign-origin components to enter the U.S. duty-deferred, undergo minimal processing, and exit duty-free — potentially circumventing the tariff protections that USMCA's rules-of-origin requirements are designed to enforce. They contend that the bill's broad language around goods "manufactured or changed in condition" may not adequately ensure that only genuinely transformed, high-value U.S.-made products receive the benefit, potentially disadvantaging purely domestic manufacturers who pay full duties on their inputs.