President Donald Trump’s administration announced a new proposal that would raise fees on Chinese shipping vessels as well as ships made in China when they dock at U.S. ports, though the fees could increase costs for American firms and consumers.
The Office of the U.S. Trade Representative (USTR) released the proposal on Friday. It would impose fees of up to $1.5 million for all port calls made by a ship built in China – including those operated by companies from outside of China.
The size of the fee would vary based on the percentage of Chinese-made ships in the shipping company’s fleet, regardless of whether the ship making the port call was made in China. Firms with 50% or more of their fleet made in China would pay $1 million per visit, while those in the 26% to 49% range would be $750,000 a visit, and those between 0% and 25% would face a $500,000 fee.
Chinese-owned shipping companies such as Cosco would face an additional fee of up to $1 million per port call, though the proposal appears to cap the total fee at $1.5 million per visit. The proposal also includes restrictions that would require increasing amounts of U.S. exports to be shipped on U.S.-flagged vessels run by U.S. operators.
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Over the next seven years, it raises the requirement for U.S. exports to be shipped on such vessels from an immediate 1% to 15%. It also adds a requirement that the vessels also be U.S. built, which rises from 3% to 5% over time from year three to year seven.
The Wall Street Journal published a report on the order that quoted Lars Jensen, CEO of Vespucci Maritime, who advises shipping lines. He said the costs stemming from the fees will impact companies that import or export products from the U.S. as well as consumers.
“For containerships, their costs will be at least 10 times higher than existing charges and affect American importers, exporters and consumers,” Jensen told the Journal. “I hope that the public debate will avert this madness.”
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A report by Lloyd’s List noted that some ship operators could look to form a separate operating company for Chinese-built ships while using another company with ships that weren’t built in China to handle U.S. port calls. It said the costs would be multiplied for each visit, causing a significant cost increase for shipping firms.
“Container lines make multiple port calls per U.S. service loop, which would multiply the fees. For example, Asia-U.S. east coast container services typically make two to three U.S. port calls, equating to a charge of $2m-$3m for every service loop,” the Lloyd’s List report said.
The outlet added that the plan “would sharply increase costs for a large number of vessels calling at U.S. ports,” which would be passed on to U.S. importers and exporters through higher costs via surcharges, higher freight rates or charter party clauses.
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USTR found that China’s government has sought to dominate the maritime shipping industry and has achieved that, creating economic security risks for the U.S. maritime industry.
“The U.S. Trade Representative determined that China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition, and creates dependencies on China, increasing risk and reducing supply chain resilience,” the report said.
The USTR proposal is now in a public comment period that will be open until the agency holds a hearing on March 24, when the administration will determine whether to implement the new fee regime.
