Vessels operating in the Caribbean and the Great Lakes are exempt from the new fees.
President Donald Trump’s administration has decided to escalate its trade war with China by introducing additional fees at ports against any Chinese-made vessels, but have included some caveats amid industry concern about cascading fees that could impact trade traffic in the short-term.
Why It Matters
Trump promised to be tough on China during his 2024 campaign and has pursued an aggressive slate of tariffs and trade restrictions in an effort to maintain his “promises made, promises kept.”Despite walking back a wider plan for reciprocal tariffs against most trading partners, the administration decided to not only stick with additional taxes on China, but continued to escalate them. Due to Beijing’s retaliation against the U.S. with matching tariffs, the Trump administration has promised a 245-percent duty on Chinese imports.
China balked at the U.S. threat, calling it a “meaningless tariff numbers game.”
What To Know
The Office of the U.S. Trade Representative (USTR) on Thursday evening issued a notice warning that the U.S. will look to levy additional fees against Chinese-made vessels “on a non-discriminatory basis,” as well as “certain fees on the maritime transport services of Chinese operators and shipowners.”Following a nine-month investigation into China’s acts, policies and practices “targeting the maritime, logistics and shipbuilding sectors for dominance,” the USTR determined that China “burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S.” maritime and shipping endeavors, thereby “creating economic security risks from dependence and vulnerabilities” and “undermining supply chain resilience.”
Supply chain reliance on China proved a major issue during Joe Biden’s administration as draconian lockdown rules led to major backlogs from Chinese shipping entities and caused a global crisis. As a result, some countries, including the U.S., worked to decrease their reliance on Chinese freight and imports.
During that time, the U.S. was able to reduce its reliance on Chinese exports, with China moving from the single greatest exporter to the U.S. to third behind Mexico and Canada.
However, the USTR during its public comments on the investigation and its preliminary findings determined that some sectors of the shipping industry had concerns about such heavy and immediate fees, resulting in several important caveats.
Initial comments focused on the largely universal nature of the fees, which would hit any vessel regardless of size or cargo, which would make it seemingly impossible for many companies to do business in the U.S.
In response, the administration said it will phase the fees—set at zero dollars for Chinese-built vessels for the first 180 days ending October 14, 2025, and increasing “on an annual basis,” even as it allows exemptions “in response to comments regarding the potential for disproportionate economic impact on certain U.S. interests or industries.”
The exemptions include:
- U.S. vessels “enrolled in certain U.S. Maritime Administration programs”
- Vessels arriving empty or in ballast (which means filling some parts with seawater for weight purposes)
- Smaller vessels
- Vessels engaged in short sea shipping
- U.S.-owned company vessels
- Specialized export vessels
- These caveats therefore aim to balance “the need to impose a service fee to disincentivize the use and purchase of Chinese-built ships” without hitting U.S. companies with undue burdens.
Additionally, fees will be linked to the weight of cargo rather than how many ports the vessels stop at, which the original proposal had determined as the best course of action. Fees will also be assessed up to five times a year.
The U.S. will also exempt vessels traveling in the Great Lakes, Caribbean and between U.S. territories.
One significant concern raised by supporters and critics of the proposal focused on the “lack of capacity of U.S. shipbuilders” to meet immediate demand, with some noting that it may take years for operators to take advantage of the benefits or unlikely to profit from them “given the lack of capacity.”
The USTR is therefore considering an adjustment to the service fee on certain sizes of Chinese-build vessels for a period not exceeding three years, ending upon delivery of a U.S.-built vessel of equal or greater size.
Source: Newsweek, via MSN