US aims to chip away at China's shipping dominance with new port fees

The Trump administration appears poised to impose new fees on Chinese-built ships that dock in US ports in an effort to slow China's dominance of global shipping.

The US Trade Representative on Feb. 21 proposed charging up to $1.5 million per vessel entrance to US ports, as part of a Section 301 investigation of "China's targeting of the maritime, logistics, and shipbuilding sectors for dominance."

China's shipbuilding market share jumped to 50% of global tonnage in 2023 from less than 5% in 1999, the USTR said.

Chinese-built vessels make up around 7% of the global LNG tanker fleet in operation today, according to an analysis by Platts, part of S&P Global Commodity Insights. However, Chinese shipbuilding yards have been expanding their market share, accounting for about 28% of LNG tankers on order.

In oil shipping, almost all of the 150 to 250 new oceangoing tankers delivered annually in recent years have been built in China, South Korea and Japan, according to a March 2024 report by the Congressional Research Service. Despite heightened demand, oil tankers under construction fell to a 40-year low because major shipyards in the three countries are oversubscribed with building containerships and LNG carriers, the report said.

"The USTR proposal is in comments stage, but it certainly is significant and symbolic, and we can clearly see that China's rising maritime dominance is under scrutiny by the US," said Rahul Kapoor, global head of shipping analytics and research for S&P Global Commodity Insights. "If it were to pass, the impact is likely to be extremely disruptive to global trade and in particular US EXIM trade."

The proposed service fees include:

• up to $1 million for entrance to a US port by a ship operated by a Chinese company, or up to $1,000 per net ton of the vessel's capacity;
• up to $1.5 million for entrance to a US port by a China-built ship, based on the percentage of Chinese-built vessels in an operator's fleet; and
• up to $1 million per vessel entrance to a US port by an operator with 50% or greater of their vessel orders in Chinese shipyards or expected to be delivered in the next 24 months.

Shippers can seek refunds of up to $1 million per entry into a US port of a US-built vessel through which the operator is providing international maritime transport services.

US importers will bear the brunt of the fees, ING analysts said in a Feb. 24 note, predicting the policy would result in "significant fines and unprecedented restrictions on the shipping industry."

The USTR proposal carries over from the Biden administration, which opened the investigation in April 2024 at the urging of five US labor unions.

During a May 2024 hearing by the USTR, the Department of China Chamber of Commerce testified that the Section 301 investigation and the proposed fees would not solve the US shipbuilding industry's problems or spur a revival.

"Instead, imposing port fees will cause substantial harm to US customers," said Dongke Yu, director of machinery industry for the group, adding that it would reduce the international competitiveness of US producers of grain, oil and natural gas.

The USTR is accepting comments on the measure and will hold a public hearing on March 24.