Foreign-Trade Zone Export Enhancement Act of 2026
- Sponsor
- Sen. Scott, Tim [R-SC]
- Committees
- Finance Committee (primary)
- Last action
- Jun 16, 2026
Bottom line
The bill aims to boost U.S. manufacturing and distribution competitiveness by eliminating U.S. duties on USMCA-origin goods processed in U.S. foreign-trade zones and re-exported to USMCA partners.
What it actually does
This bill clarifies that certain merchandise originating from a United States-Mexico-Canada Agreement (USMCA) country, when brought into a U.S. foreign-trade zone (FTZ), manufactured or changed in condition there, and subsequently exported directly to another USMCA country, will be exempt from U.S. duties. It achieves this by amending the Foreign Trade Zones Act and creating a new duty-free subheading in the Harmonized Tariff Schedule of the United States (HTSUS).
Proponents argue
Supporters argue that this bill will enhance the competitiveness of U.S. manufacturing and distribution sectors by removing an existing tariff burden, thereby incentivizing the use of U.S. foreign-trade zones. They contend that this will lead to the creation and preservation of jobs in the United States and better align U.S. trade policy with the spirit of the USMCA by facilitating duty-free trade within the North American bloc.
Opponents contend
Critics might contend that this bill could lead to a reduction in U.S. tariff revenue, potentially increasing the national deficit. They may also argue that it could create a perceived loophole, allowing goods to transit through the U.S. without appropriate duty collection, which could disadvantage domestic producers who do not utilize FTZs or those importing directly. Some might also suggest it undermines the original intent of certain USMCA duty deferral restrictions.
The bill is short and focused, making it accessible for a quick read and evaluation by an informed reader.
Section 3(a)
Amendment to Foreign Trade Zones Act for Duty-Free Export
This provision amends Section 3 of the Foreign Trade Zones Act to specify that merchandise from a USMCA country, if admitted into a U.S. foreign-trade zone, manufactured or changed in condition there, and then directly exported to another USMCA country, will be free of U.S. duty. This overrides a previous interpretation that could have subjected such goods to duties, ensuring a specific duty-free treatment for these re-exports.
Supporters argue
Proponents argue this clarification removes an unnecessary barrier to trade and manufacturing within U.S. foreign-trade zones, making them more competitive. This fosters economic activity and job retention by encouraging companies to process goods in the U.S. before re-exporting them to USMCA partners.
Critics contend
Opponents might argue that this provision could lead to a loss of U.S. tariff revenue, as duties that might have been collected under a different interpretation will now be foregone. They may also question if this creates an unintended incentive structure that could be exploited.
Tradeoffs
The provision balances the goal of enhancing U.S. trade competitiveness and job creation within FTZs against the potential loss of federal tariff revenue and the complexity of managing specific duty exemptions within broader trade agreements.
Section 3(b)
Creation of New HTSUS Subheading 9801.00.95
This section amends the Harmonized Tariff Schedule of the United States (HTSUS) to create a new subheading, 9801.00.95. This new subheading explicitly grants 'Free' duty treatment to merchandise that is subject to USMCA duty deferral restrictions, admitted into a U.S. foreign-trade zone, manufactured or changed in condition there, and then directly exported to a USMCA Party. This codifies the duty-free treatment into U.S. tariff law.