Multibillion US farm, protein trade face choppy waters over ship fees

The New US Trade Representative's action targeting China's maritime dominance could pose significant challenges to US agricultural exports, as grains, oilseeds and proteins face steep cost hikes and trade flow shifts, according to industry sources.

Announced April 17, Section 301 will impose service fees on Chinese ships from Oct. 14, escalating to $1.5 million per port entry by 2028. Tariffs up to 100% on certain Chinese-made port equipment were also proposed, with a public hearing set for May 19.

The USTR cited China's 50% share of global shipbuilding and 95% of container production as a threat to US commerce but farmgate exporters expected collateral damage.

A phased service fee based on car equivalent unit capacity will also target foreign-built vehicle carriers after the grace period, set at $150/CEU.

The USTR said the second phase of actions will begin in three years to favor US-built ships carrying LNG. These restrictions will be incremental over the following 22 years.

The USTR proposal could levy fees of up to $1 million per entrance on Chinese-operated ships accessing US ports, and up to $1.5 million per entrance on Chinese-built ships, according to analysts.

If the USTR implements the proposed fees on Chinese ships, it could lead to increased shipping costs for US agricultural exporters, making their products less competitive in international markets, analysts said.

Grains and oilseeds at risk

The National Grain & Feed Association estimated the fees could add $15-$40/mt to shipping costs for US grain and oilseed exports, equivalent to 50 cents-$1.25/bu.

The NGFA, in comments submitted earlier to the USTR, warned such measures could result in additional costs of around $1.6-$4.2 billion annually, threatening export competitiveness and eventually reducing the sector's $65 billion trade surplus.

The comments were submitted March 24, in response to the Section 301 investigation. The North American Export Grain Association and National Oilseed Processors Association also submitted comments.

Every year, US farmers produce over 130 million mt of oilseeds and over 450 million mt of grains, the exports of which add $174 billion to the US economy, as per estimates, according to the associations.

Among these, soybeans, corn and wheat are key US exports that are particularly vulnerable.

In the comments, the associations said US wheat production could fall by around 33% primarily due to a sharp 64% drop in exports. This decline could reduce farmers' wheat revenue by about $3-$4 billion each year.

Soybean production is also likely to take a hit, estimated to decrease by 18% due to a 42% drop in exports. As a result, soybean farmers may lose around $10 billion in revenue annually.

Corn production is expected to decline by about 3.6%, with exports down nearly 9%, which could lead to a revenue loss of approximately $3 billion per year for corn farmers.

"Soybean exports could be lost to competitors like Brazil," an NGFA member said. Higher costs could push China toward Brazil, which has projected soybean production for 2025 at 153 million mt.

From April 1, 2024, to date, the US has exported soybeans worth 45 million mt, while supplies to China amounted to 22.6 million mt, or 50.2%, according to S&P Global Commodities at Sea. During the same period, US corn exports were recorded at 54.8 million mt, with only 1.02 million mt or 1.86% destined for China, CAS data showed.

Commodity Insights analysts expected a trade dispute could lower US 2025-26 soybean exports by 8.1 million mt.

The effects of decreased exports would extend further throughout the agricultural value chain to include exporters of grains, oilseeds and their derivative products, including biofuel feedstock such as ethanol and soybean oil along with dried distillers grains with solubles, corn gluten feed and soybean meal.

This would also impact longshoremen and related export services providers like barge and rail transportation providers, processors and millers, terminal and country elevators.

Proteins face supply chain squeeze

The US pork and beef exports, reliant on container ships, could see costs rise by 10 cents-20 cents/kg due to proposed tariffs on Chinese chassis and containers, according to market analysts, based on estimates by the US Meat Export Federation and American Farm Bureau Federation.

Chinese chassis holds an 86% market share globally.

In 2024, US beef supplies to China reached 179,464 mt, equivalent to a nominal value of $1.58 billion, according to the US Department of Agriculture's Foreign Agricultural Service. The US supplied 467,228 mt of pork to China worth $1.11 billion in nominal terms, according to the data.

China was the third-largest market for US beef and pork in 2024, but trade flows are now at risk.

"Container shortages could delay shipments, hitting our $4 billion protein trade surplus," said a farm owner and member of the US Meat Export Federation. "China may source pork from the EU or Brazil, and beef from Australia, if costs climb."

The American Farm Bureau Federation warned of a 5%-10% drop in protein exports, particularly for high-value, containerized goods like pork and beef.

Commodity Insights analysts expected a trade disruption could threaten $2.7 billion in beef trade, $340 million in chicken trade and $461 million in pork trade. This could force exporters and importers to negotiate new contracts and reassess supply dynamics.

The NGFA and Farm Bureau are urging exemptions for agricultural commodities in the form of grants, tax credits or deregulation that would boost US shipbuilding without affecting farmers

According to the International Food Policy Research Institute's latest modeling analysis in a blog, the tariffs could lead to a contraction of 3.3%-4.7% in global agricultural trade and a decline of 0.3%-0.4% in global GDP, with US GDP falling further by 1%-1.2%. These estimates reflect a scenario where countries would retaliate against the US and the USTR's actions may reshape trade flows, leaving US farmers navigating rough waters.