The Trump administration’s newly floated 0.125% “land port maintenance tax,” pitched as a fix to align shippers using land ports with those subject to the Harbor Maintenance Fee, looks less like infrastructure policy and more like contingency planning now that the US Supreme Court has struck down the administration’s tariff program under the International Emergency Economic Powers Act.
If shipbuilding capacity is important to national security, lawmakers should create a fund within the Department of Defense—where it belongs. If, on the other hand, the HMF is malfunctioning and distorting cargo routing, it should be reformed.
The administration’s new maritime action plan argues that the absence of a land-based equivalent to the HMF incentivizes shippers to route cargo over land through Canada and Mexico rather than through US seaports. The plan aims to impose a levy at the land border and deposit the proceeds into a new land port maintenance trust fund intended to support port infrastructure.
Why are we taxing land-based trade flows in the same policy framework that seeks to subsidize maritime industrial policy? The timing suggests an answer.
The Supreme Court ruled last week in Learning Resources, Inc. v. Trump that IEEPA doesn’t give the president the authority to impose tariffs—rejecting the administration’s theory that the power to regulate importation presupposed a power to levy duties. In doing so, the court affirmed that Congress alone holds taxing power absent clear statutory delegation.
With that route foreclosed, policymakers will be looking for alternative statutory mechanisms to preserve trade leverage. A border-based “maintenance” fee likely seems attractive now. The land port maintenance tax proposal is difficult to unwind from the legal context in which it arrives. Whether as planned substitute or useful safeguard, the land port tax looks like it was drafted less with an eye toward routine maintenance and more toward customs code-embedded backup planning.
The administration’s tariff efforts had faced sustained legal scrutiny, and the scope of unilateral executive trade authority was contested long before the Supreme Court’s decision. Now that the court has clarified the contours around IEEPA’s limits, any effort to recreate similar economic pressure will draw even closer scrutiny. So a “maintenance” charge, tied to border entry and laundered through language of infrastructure parity, may be viewed as easier to implement. Its defense will turn on the administrations’ ability to distinguish its function from that of the tariffs the court just invalidated.
A tax imposed on goods entering by land can’t be geographically neutral—most of that trade is necessarily going to flow through Canada and Mexico. In practice, a land port maintenance tax would be much closer to a North American supply chain tax in terms of economic incidence.
A charge imposed at the border on imported goods is a tariff in substance, even if it’s dressed up in infrastructure policy attire. The customs code may change, but the price effect doesn’t. US importers—and ultimately consumers—would bear the cost.
For starters, the HMF analogy doesn’t really hold water. The administration’s justification turns on “parity”—but for all its flaws, the HMF carries some conceptual nexus. It is tied to dredging, channel maintenance, and port infrastructure.
Reasonable people can disagree as to whether it is well designed and whether collections are spent properly. But there is a user-fee logic undergirding the policy—that is to say, the entity or sector using a provided service should bear the cost of its provision.
The Trump administration’s proposal doesn’t meaningfully tie the new fee to land-border infrastructure needs. Formally, the revenue is directed to a fund for land port improvements. Yet within the broader maritime action plan, new border-based fees sit alongside explicit shipbuilding subsidies and the creation of maritime trust funds, muddying the water about what this plan is supposed to achieve.
It would be more logical to reform the HMF—due to concerns over how it affects shipping decisions and reroutes cargo over land—by improving spending, eliminating unintended incentives, and reexamining levy logic. Replicating a distortion inland just multiplies the distortion, swapping water for dirt.
When a fee isn’t tied to the thing it claims to maintain, and instead finances some seemingly favored sector, it no longer reads as a maintenance fee and begins looking more like a subsidy. When the fee is imposed at the border, the economic effect mirrors trade protection—even if the term “tariff” is never used.
Instead, the government should implement a maritime security fund and subject it to congressional appropriations. It could tie the funding to clear performance benchmarks such as output capacity, cost, readiness, delivery timelines, and the like. Maybe even include sunset provisions once strategic capacity thresholds are crossed. In aiming to rebuild an industry for security reasons, we should be able to articulate measurable goals and step back when those goals are met.
That approach would also force a public assessment of the true cost of policymakers’ ambitions. A dedicated appropriations framework makes the trade-offs visible—but if shipbuilding is worth billions in federal support, then Congress should be made to assert that and lay out what other priorities would need to give way to make it happen. By contrast, trust funds and border fees obscure the fiscal reality and detach the subsidy from the ordinary budget process.
Alternatively, if policymakers reform the HMF and insist on an additional fee, it could be tied directly to maritime activity or articulate why disincentivizing land cargo shipments is desirable. After Learning Resources, any border charge that functions like a tariff may face constitutional and statutory skepticism.
If we’re going to tax trucks to build ships, let’s at least admit that, explain why we’re doing it, and be clear about who would benefit. Absent some compelling reason, the maritime sector should bear the cost of a tax that helps it out.
Andrew Leahey is an assistant professor of law at Drexel Kline School of Law, where he teaches classes on tax, technology, and regulation. Follow him on Mastodon at @andrew@esq.social.
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