Bill to End Tariffs on Components of Some FTZ Exports Introduced
A bill to allow goods headed for export to Mexico and Canada to avoid tariffs on imported components was introduced this week by five House Republicans and one Democrat.
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The products assembled in foreign-trade zones, which meet USMCA rules of origin, are not duty free when they exit the FTZs, even though they would have been duty-free if they were imported from Mexico and Canada (assuming they are not subject to 232 tariffs). Rather, there are tariffs due on their imported components.
Mexico and Canada have foreign-trade zone arrangements that allow imported goods to enter duty-free, and the finished product headed to the U.S. is duty-free. However, the Office of the U.S. Trade Representative is trying to get Mexico to curtail that practice.
Rep. Lance Gooden, R-Texas, leads the push for the Foreign-Trade Zone Export Enhancement Act of 2025.
"American manufacturers should never be punished for building here at home," he said in a release announcing the bill. "This bill cuts red tape, boosts U.S. exports, and strengthens trade with Mexico and Canada to keep good-paying jobs in America."
He said the bill would amend the Foreign-Trade Zones Act (19 U.S.C. 81c) to create a new tariff classification ensuring duty-free export eligibility for qualifying goods produced in U.S. FTZs, prevent arbitrary rule changes or reclassifications that could disrupt U.S. manufacturing or export operations, and require CBP to implement clear, uniform regulations within 90 days of the bill's signing into law.
Reps. Vincente Gonzalez, D-Texas, Monica De La Cruz, R-Texas, Virginia Foxx, R-N.C., Vern Buchanan, R-Fla., and Mike Kelly, R-Pa., are co-sponsors. The last two are members of the House Ways and Means Committee.
The National Association of Foreign-Trade Zones hailed the bill.
"Foreign-Trade Zones exist to strengthen U.S. competitiveness, not undermine it," said Jeffrey J. Tafel, president of NAFTZ. "Yet under USMCA, American manufacturers operating in FTZs are required to pay duties on imported components before exporting finished goods to Canada or Mexico, even when those goods fully qualify for USMCA preferential treatment. This legislation is a pragmatic, targeted fix that restores parity and reinforces the U.S. as the best place to manufacture and export goods."