AUSTRALIAN exporters to the US must prepare for supply chain disruption, cost increases and potential conflicts over costs allocations if the US goes ahead with proposed levies on Chinese shipping.
In 2024, the US imported more than $16.5 billion of goods from Australia. Most of these goods were transported by sea, and a significant proportion on Chinese owned, operated, or built ships.
In February 2025, following a Biden-era trade practices investigation, the office of the US Trade Representative announced a slate of measures to combat China’s influence on maritime, logistics and shipbuilding sectors (see Table). Public hearings are scheduled for 24 March.
The headline measures are the proposed ‘service fees’ – a sort of levy – on the operators of vessels making port calls in the US who have the requisite connection with China or Chinese shipbuilding. They include a direct levy of up to US$1 million per port call per vessel operated by a Chinese entity. Additionally, there are proposed levies of up to US$1.5 million per vessel per US port call, as long as the operator, regardless of nationality, has Chinese-built vessels in its fleet, or newbuilds on order at a Chinese yard.
In their current form, they could significantly impact the container liner trade to the US. Recently, the MSC CEO, Soren Toft, estimated about a 20-25% increase in freight rates on Asia-US services, and a near doubling on transatlantic services.
Particularly if the levies cannot be immediately passed on to shippers, some of the tonnage trading to the US may be withdrawn. This would significantly affect smaller ports, and would burden major ports with added volume that they have previously shown to struggle with. In turn, this would lead to congestion and delays at ports which have only recently eased substantial backlogs.
There is cautious hope that the measures would be re-balanced when enacted. Some analysts suggest that as with the whipsawing trade tariffs, the measures may be intended to give the US administration strategic leverage to extract favourable concessions in negotiations with the Chinese government or vessel operators, and that their final form will be different. There is a ring of truth to that, following CMA CGM’s recent announcement of a mammoth $20 billion investment into US shipping.
Whatever the final form, the measures are likely to have an impact on Australian exporters as carriers seek to pass the additional costs down the line.
Australian shippers/charterers must establish if, given the fleet composition of carriers/owners/operators, there is risk of the levies applying: there is a high likelihood that would be the case.
Particularly in the bulk and breakbulk trades, the terms of existing charterparties or contracts of affreightment should be examined to properly understand charterers’ potential exposure. Unless those terms are presciently clear about how the proposed levies ought to be allocated, there is a risk of potential dispute about who pays.
Voyage charterparties typically require owners to pay charges, duties and taxes levied on the vessel, while the charterers are to pay those levied on the goods or containers. Slot charters commonly have a similar allocation. Time charterparties however usually place the burden on charterers of port charges and other usual expenses to support the vessel’s operations when it puts into a port, save for crew-related costs.
Care should be taken to properly understand the proper characterisation of the proposed levies to determine precisely which party is to pay. This will require careful consideration of the wording of the measures and of the applicable charterparty or carriage terms.
The final form of the measures, if enacted, will dictate the state of play. Australian exporters will need to act quickly and decisively to determine their exposure and put in place plans to manage the associated risks.
Ashwin Nair is director at Nair Legal, Perth
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