US unveils new port fees on China-built ships after industry backlash

LOS ANGELES: The United States unveiled new port fees on Chinese-built and operated ships on Thursday (Apr 17), in a bid to boost the domestic shipbuilding industry and curb China's dominance in the sector.

The move, which stems from a probe launched under the prior administration, comes as the US and China are locked in a major trade war over President Donald Trump's tariffs and could further ratchet up tensions.

The Federal Register notice posted by the US trade representative (USTR) was watered down from a February proposal for fees on China-built ships of up to US$1.5 million per port call that sent a chill through the global shipping industry.

China's commerce ministry on Friday expressed dissatisfaction and opposition after the announcement.

In a statement, the Chinese ministry called on Washington to stop "shifting blame" and correct its "wrong" practice as soon as possible.

"China will closely monitor relevant developments from the US side and will resolutely take necessary measures to safeguard its own interests," the statement added.

Ocean shipping transports about 80 per cent of global trade - from food and furniture to cement and coal. Industry executives feared virtually every cargo carrier could face steep, stacking fees that would make US export prices unattractive and foist annual import costs of US$30 billion on American consumers.

"Ships and shipping are vital to American economic security and the free flow of commerce," US Trade Representative Jamieson Greer said in a statement announcing the new fees, most of which will begin in mid-October.

Under the new rule, per tonnage or per container fees will apply to each Chinese-linked ship's US voyage, and not at each port as some in the industry had worried.

The fee will be assessed only up to five times per year, and can be waived if the owner places an order for a US-built vessel.

Dominant after World War II, the US shipbuilding industry has gradually declined and now accounts for just 0.1 per cent of global output.

The sector is now dominated by Asia, with China building nearly half of all ships launched, ahead of South Korea and Japan. The three Asian countries account for more than 95 per cent of civil shipbuilding, according to UN figures.

There will be separate fees for Chinese-operated ships and Chinese-built ships, and both will gradually increase over subsequent years.

For Chinese-built ships, the fee starts at US$18 per NT or US$120 per container - meaning a ship with 15,000 containers could see a whopping fee of US$1.8 million.

Beijing warned on Friday the new fees would be "detrimental to all parties."

"They drive up global shipping costs, disrupt the stability of global production and supply chains, increase inflationary pressure within the United States, and harm the interests of American consumers and businesses," foreign ministry spokesman Lin Jian said.

"Ultimately, they will not succeed in revitalising the US shipbuilding industry," he said.

EXEMPTIONS

The revisions tackle major concerns voiced in a tsunami of opposition from the global maritime industry, including domestic port and vessel operators as well as US shippers of everything from coal and corn to bananas and cement.

They grant some requested carve-outs, while phasing in fees that reflect the fact that US shipbuilders, which turn out about five vessels annually, will need years to compete with China's output of more than 1,700 a year.

The USTR exempted ships that ferry goods between domestic ports as well as from those ports to Caribbean islands and US territories. Both American and Canadian vessels that call at Great Lakes ports have also won a reprieve.

As a result, companies such as US-based carriers Matson and Seaboard Marine would dodge the fees. Also exempt are empty ships arriving at US ports to load up with exports such as wheat and soybeans.

Foreign roll-on/roll-off auto carriers, known as ro-ros, are eligible for refunds of fees if they order or take delivery of a US-built vessel of equivalent capacity in the next three years.

The USTR set a long timeline for liquefied natural gas (LNG) carriers.

They are required to move 1 per cent of US LNG exports on US-built, operated and flagged vessels within four years. That percentage would rise to 4 per cent by 2035 and to 15 per cent by 2047.

The agency, which will implement the levies in 180 days, also declined to impose fees based on the percentage of Chinese-built ships in a fleet or on prospective orders of Chinese ships, as originally proposed.

The fees will be applied once each voyage on affected ships a maximum of six times a year.

CHINA'S MARITIME ACTIVITIES

The notice comes on the one-year anniversary of the launch of the USTR's investigation into China's maritime activities.

In January, the agency concluded that China uses unfair policies and practices to dominate global shipping.

The actions by both the Biden and Trump administrations reflect rare bipartisan consensus on the need to revive US shipbuilding and strengthen naval readiness.

Leaders of the United Steelworkers and the International Association of Machinists and Aerospace Workers, two of five unions that called for the investigation that led to Thursday's announcement, applauded the plan and said they were ready to work with the USTR and Congress to reinvigorate domestic shipbuilding and create high-quality jobs.

The American Apparel & Footwear Association reiterated its opposition, saying port fees and proposed tariffs on equipment will reduce trade and lead to higher prices for shoppers.

At a May 19 hearing, the USTR will discuss proposed tariffs on ship-to-shore cranes, chassis that carry containers and chassis parts. China dominates the manufacture of port cranes, which the USTR plans to hit with a tariff of 100 per cent.

The Federal Register did not say if the funds raised by the fees and proposed crane and container tariffs would be dedicated to fund a revival of US shipbuilding.