The Office of the U.S. Trade Representative (USTR) is the government agency responsible for developing and coordinating U.S. trade policy. Recently, it has proposed a drastic measure to impose massive port fees on Chinese-built ships entering American ports. These fees could reach up to $1.5 million per vessel entry, representing an aggressive attempt to curb China’s dominance in global shipbuilding and maritime logistics.

The proposal follows an investigation under Section 301 of the Trade Act of 1974, which allows the U.S. to retaliate against unfair foreign trade practices. The report, initiated during the Biden administration and finalized just before Donald Trump’s return to office, highlights how China has used heavy state subsidies to capture more than 50% of the global shipbuilding market. The U.S., once a major player in shipbuilding, now produces only about five ships annually, a stark contrast to the 70 per year it built in the 1970s.

Understanding the Proposed Fees

The proposed policy outlines a tiered structure for port entry fees, targeting both Chinese-owned vessels and ships built in China, regardless of the company operating them:

• Chinese-owned shipping companies (such as COSCO) would pay up to $1 million per vessel per port entry.
• Non-Chinese operators using Chinese-built ships would face fees up to $1.5 million per port entry.
• Shipping firms with more than 50% of their fleet built in China would be charged $1 million per vessel per entry.
• The fee reduces based on the percentage of Chinese-built ships in an operator’s fleet: $750,000 for fleets with 25-50% Chinese-built ships and $500,000 for fleets below 25%.
• Additional fees would apply for companies that have ordered ships from Chinese shipyards for delivery within the next two years.

The plan also incentivizes domestic shipbuilding by offering rebates of up to $1 million per entry for U.S.-built ships operating in international trade.

How Does This Compare to Normal Port Fees?

Under current regulations, port fees vary widely based on ship size and services required, but they typically range in the tens of thousands of dollars—not millions. Container ships calling at U.S. ports might pay anywhere from $10,000 to $100,000 in total fees, covering services such as pilotage, docking, and security. The USTR’s proposal represents a dramatic increase, likely making Chinese-built ships prohibitively expensive to operate in U.S. waters.

The Potential Impact on Chinese Trade

This policy is designed to disrupt China’s shipping dominance and bolster the struggling U.S. maritime industry. If enacted, the steep costs could:

• Drive Chinese shipping companies away from U.S. trade routes, forcing them to offload goods in alternative ports like Mexico or Canada.
• Increase shipping costs for American importers and exporters, as the fees would likely be passed on to businesses relying on Chinese-built vessels.
• Pressure global shipping companies to reduce reliance on Chinese-built ships, potentially revitalizing shipbuilding in the U.S. and allied nations.
• Encourage alternative supply chain strategies, including reshoring manufacturing or diversifying suppliers to reduce reliance on China.

However, this move could also backfire by increasing the cost of imported goods, exacerbating inflation, and making American exports less competitive due to higher freight costs.

How is China Responding?

China has strongly condemned the proposal, calling it “self-damaging” and warning of retaliatory actions. Beijing has accused the U.S. of protectionism and has hinted at potential countermeasures, such as imposing reciprocal fees on U.S. ships or restricting access to Chinese ports.

Industry experts, including Lars Jensen, CEO of Vespucci Maritime, have expressed concern that the fees could destabilize global trade. “If the intention is to drastically increase costs for U.S. importers and make U.S. exports uncompetitive, this proposal is likely to do the job,” Jensen warned.

Some Chinese operators are already exploring workarounds, such as transferring their Chinese-built ships to separate subsidiaries to avoid the fees. Others may seek to reroute cargo through nearby countries to minimize costs.

Are We Serious About Restricting Trade with China?

This proposal signals that the U.S. is taking a hardline stance on reducing economic dependence on China. The broader strategy includes increasing requirements for U.S. exports to be shipped on American-flagged vessels—starting at 1% and rising to 15% over seven years.

Additionally, the USTR is considering banning U.S. port terminals from using Chinese-developed logistics software (LOGINK), further restricting China’s access to maritime trade data.

The Bigger Picture

This move aligns with other protectionist policies, including increased tariffs on Chinese goods and a renewed emphasis on American industrial policy. With bipartisan support in Congress for tougher trade enforcement, these measures could have lasting effects on global trade dynamics.

While the effectiveness of the USTR’s proposal remains uncertain, one thing is clear: the U.S. is no longer just talking about restricting trade with China—it’s taking concrete steps to make it happen.

ACZ Editor: This is a negotiating position, much like most of the harsher moves by the Trump Administration. But not a bluff. This will happen if China does not make serious concessions. Trump wants China to know that the imbalances and unfair practices are a thing of the past.

China’s shipbuilding industry is a problem for the U.S. This directly attacks anyone using a Chinese ship, which puts a huges damper on their ship sales – it will be extremely difficult to maintain that level of military shipbuilding infrastructure if civilian ships are not selling.