The US Trade Representative has proposed to impose high port fees on Chinese-built vessels. Here are the key elements of the proposal.
Just weeks after Donald Trump began his second term as President of the United States, the Office of the U.S. Trade Representative (USTR) announced potential trade actions against China, particularly concerning Chinese-built ships. This initiative was prompted by petitions from five U.S. labor unions, which claimed that China was targeting the maritime, logistics, and shipbuilding sectors for dominance. In response, the USTR launched an investigation in April 2024, concluding that Chinese shipyards were allegedly engaging in unfair trade practices that warranted action under Section 301 of the U.S. Trade Act.
The USTR has now released its proposed actions and is inviting public comments until March 10, ahead of a public hearing scheduled for March 24. Ultimately, President Trump will have the final say on any new measures.
Proposed Actions
The USTR asserts that the proposed measures aim to eliminate unfair trade practices in China. Key proposals include:
a) Service Fee on Chinese Vessel Operators
Under this proposal, Chinese vessel operators would face a fee of up to $1 million per entry to a U.S. port, or up to $1,000 per net ton of the vessel’s capacity. Most vessels are expected to incur the $1 million fee per port call, which would apply each time a vessel visits a U.S. port.
b) Service Fee on Operators with Chinese-Built Vessels
The proposed action also targets operators of vessels that are Chinese-built. A fee of up to $1.5 million would be imposed on these vessels. Additionally, operators with fleets that include Chinese-built ships would incur fees based on the proportion of such vessels. For example:
Operators with 50% or more Chinese-built vessels: up to $1 million per vessel per entry.
Operators with 25-50% Chinese-built vessels: up to $750,000 per vessel per entry.
Operators with up to 25% Chinese-built vessels: up to $500,000 per vessel per entry.
c) Service Fee on Future Orders for Chinese Vessels
The USTR’s proposal extends to operators with pending orders from Chinese shipyards, imposing similar charges on their existing vessels based on the proportion of their orders.
d) Fee Remission for U.S.-Built Vessels
Operators can reduce their service fee liability by trading in a U.S.-built vessel for calls to U.S. ports, potentially receiving a refund of up to $1 million per entry. However, this may benefit only a limited number of operators, as U.S.-built vessels represent a small share of global tonnage.
Next Steps
The proposal is currently open for discussion as the USTR gathers public feedback and prepares for the upcoming hearing. As it stands, the charges appear to pertain to the vessel or freight rather than the cargo itself, impacting “vessel operators.” Most shipowners are likely to be considered operators, although some charterers might also fall under this definition until clarified. Each charterparty will need to be assessed based on its specific language and trading circumstances. Typically, taxes and dues related to the vessel are the owner’s responsibility, while those on cargo fall to the charterer. Consequently, it may be the owners who bear the proposed tax, although there are legal precedents suggesting that time charterers could be classified as operators.
As the U.S. administration finalizes its decision, many of these uncertainties may be resolved, though the outcome may not be welcomed by the industry.
