U.S. President Barack Obama recently signed the new Water Resources Reform and Development Act. While the Bill’s stated focus is on improving water infrastructure and ecosystems, it also has the potential to affect cargo shipping from Canada to the U.S..The really good news is that Canadian ports were spared a proposed cargo tax that was to be included in the Bill. The cargo tax was originally included in response to members of congress from Washington state who complained that shipping ports in Seattle and Tacoma were unable to compete with nearby Canadian ports due to the American tax system.
Had the cargo tax been included, there could have been two major effects on shipments from Canada to the US, both over land and by sea:
- Decreased Traffic at Canadian Ports – The proposed cargo taxes – 0.125% on all cargo shipped to the U.S. from Canadian ports – would ultimately result in a reduction in the freight that passes through Canadian ports on both the east and west coasts.
- Increased Shipping Times Over Land - Much of the cargo that would no longer pass through sea ports would have become truck shipments, which were not affected by the new law. The increased demand on trucking shipments between the two countries would have increased shipping times due to longer schedules and added delays at busier border crossings.
The tax also had the potential for an even larger effect on continental trade. The slowing down of cross-border freight would have also slowed down the economy, which depends on the timely movement of goods. Also, according to metronews.ca, Canadian Transport Minister Lisa Raitt recently mentioned the possibility of trade sanctions in response to the tax, which would have been a further blow to the North American economy.