US proposed port fees on Chinese-built vessels & operators
Date of Publication: March 14th, 2025
Overview
On January 23, 2025, the United States Trade Representative (USTR) published a Federal Register Notice stating it has
determined that China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is actionable under section 301 of the Trade Act of 1974
. This was based on the information obtained during the investigation, and taking account of public comments, as well as the advice of the Section 301 Committee and advisory committees. The initial petition was filed in March 2024 regarding the acts, policies, and practices of China to dominate the maritime, logistics, and shipbuilding sector and accusing China of engaging in a wide range of unreasonable or discriminatory acts, policies, and practices that provide unfair advantages.In the subsequent report that was published, the USTR cited the undercutting of business opportunities for and investments in the U.S. maritime, logistics and shipbuilding sectors, restrictions on competition and choice, creation of economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy, and the undermining of supply chain resilience. For instance, China’s share of the shipbuilding market grew from less than 5% in 1999 to over 50% in 2023. As of today, China controls 95% of shipping container production and 86% of intermodal chassis.
Proposed trade actions
To address the concerns about China’s impact on U.S. maritime industries, the USTR has proposed multiple initiative-taking measures designed to promote fair competition and reduce dependence on China’s dominance in these sectors.
The proposed actions include imposing certain fees and restrictions on international maritime transport services related to Chinese ship operators and Chinese-built ships, as well as to promote the transport of U.S. goods on U.S. vessels. Proposed actions are as follows:
Service fee on Chinese maritime transport operators
- o A vessel operator of China (e.g., COSCO) would be charged a fee on the international maritime transport being provided (a) at a rate of up to $1,000,000 per entrance of any vessel of that operator to a U.S. port; or (b) per entrance of any vessel of that operator to a U.S. port, at a rate of up to $1,000 per net ton of the vessel’s capacity.
Service fee on maritime transport operators with fleets comprised of Chinese-built vessels
- Operators of Chinese-built vessels that call on a U.S. port will 1) pay a fee at each U.S. port call of up to $1.5 million, 2) on a sliding scale based on the percentage of Chinese-built vessels in that operator's fleet or 3) pay an additional fee of up to $1 million per vessel entrance to a U.S. port if their fleet comprises more than 25 percent Chinese-built vessels. Such fees are payable regardless of the vessel's flag or that the vessel's operator is not a Chinese national or Chinese-controlled.
- In 2024, Chinese-built container vessels held 81% market share, according to Veson Nautical data. All ten of the world’s largest ocean carriers have at least some Chinese-built vessels in their fleets.
Chinese shipyards fee
- An additional fee could be assessed against Maritime Transport Operators of any nationality based on the percentage of vessels ordered from Chinese shipyards under either 1) a sliding scale of per entrance charges based on the percentage of vessels to be ordered by Chinese shipyards over the next 24 months or 2) a fee of up to $1 million per vessel entrance to a U.S. port if 25 percent or more of the total number of vessels ordered by that operator are ordered by Chinese shipyards over the next 24 months.
Commercial cargo preference
- The proposed action also includes a seven-year schedule of increasing cargo preferences for export of "all U.S. goods, such as capital goods, consumer goods, agricultural products, and chemical, petroleum or gas products" to be moved on U.S.-flagged vessels, regardless of destination. The schedule proposes a rapid increase in exports shipped aboard U.S. built vessels, from 1 percent of all U.S. exports effective immediately upon adoption of the proposal to at least 15 percent of all U.S. exports by year 7.
In addition to the fees, the USTR proposed the following:
- Requirements for U.S. goods to be increasingly transported on U.S.-built vessels.
- Restricted access on China’s National Transportation and Logistics Public Information Platform of U.S. shipping data.
- Potential negotiations with allied countries to counter China’s policies and reduce reliance on Chinese-dominated maritime sectors.
The proposal builds on efforts by the Trump Administration and policymakers to rally support for the U.S. shipbuilding sector and U.S.-flag registry. The SHIPS for America Act, which was introduced in the 118th Congress and is expected to be reintroduced to the current Congress, imposes similar cargo preference for U.S. imports and exports and proposes solutions to bolster the U.S. shipbuilding sector.
Next steps
The USTR announced a request for public comment and a public hearing for its proposed trade actions in response to the Section 301 investigation. The public hearing will be conducted on Thursday, May 29, 2025.
Additionally, the USTR is currently soliciting public comments that must be submitted by Monday, March 24, 2025. There will be a specific focus on the extent of China’s burden on U.S. commerce.
Conclusion
The potential cost impact because of these fees is something that will need to be considered for companies in the global market. Approximately 80% of global trade by volume and a sizable portion by value is transported by sea via vessel carriers according to United Nations Conference on Trade and Development (UNCTAD). There are numerous outstanding concerns by industry and the trade due to the lack of clarity on various proposed actions (i.e., it is unclear whether a ship that is both Chinese-built and operated by a Chinese company could be subject to double charges for each U.S. port call, and what is the definition of “Chinese Maritime Operator”).
Potential fees will most likely trickle down to the beneficial cargo owners, increasing the landed cost which is already experiencing the impact of increased tariffs globally. There will also be the challenge of identifying what cargo is moving on carriers that will be impacted, and whether multi-year contract agreements for those services can be adjusted to mitigate impact without penalty.
Bottom line, the proposal has caused uncertainty that could have significant repercussions for contractual agreements, including the allocation of costs between owners, operators, technical managers, charterers, as well as impact to beneficial cargo owners. Companies should begin the effort of reviewing their current supply chain and carrier agreements to identify potential impact, as well as providing comments to the USTR to assist in clarifying outstanding issues.
For more information on how ONESOURCE Global Trade solutions can assist you in managing supply chain risk and regulatory compliance, contact your Account Manager or Customer Success Manager.