**Washington DC**: The US Trade Representative has announced a phased reduction in fees for Chinese vessels entering US ports, easing initial costly charges after industry backlash. The plan aims to gradually incentivise US-built ships while balancing economic and supply chain concerns amid China’s shipbuilding dominance.
The United States has announced a significant reduction in its planned fees targeting Chinese vessels entering U.S. ports, following widespread opposition from industry stakeholders. The decision was officially communicated by the Office of the United States Trade Representative (USTR) on Thursday, 17 April 2024.
Initially, the Trump administration had proposed steep charges that could have amounted to as much as $1.5 million per voyage for Chinese-owned or operated ships based on their net tonnage. These fees aimed to counter China’s dominant position in the global shipbuilding sector and to incentivise the use of U.S.-built vessels. However, the plan faced strong criticism from various parts of the shipping industry, trade associations, port authorities, and unions, who expressed concerns that such fees would ultimately damage the U.S. shipping industry and disrupt supply chains.
In the revised approach, the USTR has opted for a phased introduction of fees. For the first 180 days following implementation, fees on Chinese vessels will be set at zero. After this period, fees on vessel owners and operators from China will be levied based on their net tonnage per U.S. voyage, with incremental increases over the next three years. Additionally, operators of Chinese-built ships will incur fees linked to the net tonnage of containers they carry, also rising incrementally. To encourage the utilisation of U.S.-built car carrier vessels, fees on foreign-built carriers will be calculated based on their capacity.
Jamieson Greer, U.S. Trade Representative, explained the decision, saying, “Ships and shipping are vital to American economic security and the free flow of commerce. The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”
Under the new structure, if a vessel makes multiple entries into U.S. ports before continuing to an international destination, fees will be calculated per rotation or group of port calls. However, fees will be capped at five charges per vessel annually to prevent excessive financial burden. After the initial six-month grace period, the fee for Chinese vessel owners will start at $50 per net ton and escalate gradually over a three-year span.
Foreign vehicle carriers are included under a similar phased scheme. Their fees will begin at zero for 180 days, then shift to $150 per car equivalent unit (CEU) for non-U.S.-built vessels entering American ports. Notably, the USTR exempts certain vessels such as those engaged in U.S. Maritime Administration programmes like the Maritime Security Program and the Tanker Security Program. Other exemptions apply to empty or ballast vessels, those below specific size thresholds, short-sea shipping routes under 2,000 nautical miles, ships owned by U.S. companies, and certain specialised export vessels.
These measures follow a year-long investigation initiated under Section 301 of the 1974 Trade Act, which empowers the U.S. to address unfair foreign trade practices. The probe targeted China’s maritime, logistics, and shipbuilding sectors, highlighting their growing influence. A two-day public hearing was held in March 2024 at the International Trade Commission in Washington DC, drawing over 600 letters and substantial participation from various stakeholders.
Trade bodies such as the Chamber of Marine Commerce, the National Retail Federation, the American Apparel and Footwear Association (AAFA), and the American Soybean Association (ASA) voiced concern about the potential disruption caused by the proposed fees. Several small to medium-sized ports warned that ships might detour away from their routes to avoid fees, concentrating traffic in larger ports and straining infrastructure investments.
Unions, including the United Steelworkers, played a pivotal role in urging governmental action due to concerns over China’s expanding dominance. However, at a recent Senate Finance Committee hearing, Greer clarified that the administration wanted to avoid inflicting economic harm through overly aggressive fee structures.
The original hefty fees, which included up to $1 million per vessel owned by Chinese operators and $1,000 per net ton of cargo capacity, as well as charges of up to $1.5 million on operators using Chinese-built ships, have now been replaced with this more moderate, phased approach.
Looking forward, the USTR has also indicated plans for a second phase starting in 2028. This would seek to incentivise U.S.-built liquefied natural gas (LNG) vessels through a system of incrementally increasing restrictions on foreign vessels transporting LNG. These restrictions are planned to expand over a 22-year period.
Furthermore, the USTR is soliciting public comments by 8 May 2025 on proposed tariffs related to ship-to-shore cranes and other cargo handling equipment, under the framework of the President’s Maritime Executive Order.
The broader context of these developments reflects a striking shift in global shipbuilding since 1975 when U.S. yards held a dominant position, commanding orders for approximately 70 commercial vessels. Currently, U.S. shipyards account for less than 1% of worldwide commercial vessel production, whereas China has surged to dominate the industry, producing over 1,000 oceangoing vessels in 2023 and controlling more than 50% of global shipbuilding tonnage.
The Wall Street Journal has reported that vessels travelling from China to the U.S. typically carry around 12,000 40-foot containers, underscoring the volume of maritime trade potentially affected by these policies.
These phased fee structures and future measures thus represent the U.S. government’s calibrated response to China’s leading role in shipbuilding, balancing industry concerns with strategic economic interests. The adjustments reflect a cautious progression towards reshaping maritime commerce and reinforcing domestic shipping capabilities.
Source: Noah Wire Services
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