THE Trump administration’s proposal to charge up to US$1.5 million per port call for Chinese-built and/or owned vessels entering US ports will come at substantial cost to shippers in the Pacific and could lead to a sharp reduction in services.
Federal Register Notice USTR-2025-0002 (DCN 25 February) was issued as part of the investigation by the office of the United States Trade Representative into China’s domination of the global shipbuilding and maritime sectors.
The study was instigated under the Biden Administration and prompted by five US labour unions, into unfair foreign practices affecting US commerce, under Section 301 of the Trade Act of 1974.
USTR is now inviting comments from the public on proposed Section 301 actions “aimed to obtain the elimination of China’s acts, policies, and practices targeting the maritime, logistics, and shipbuilding sectors for dominance. In this Section 301 investigation, USTR has found China’s acts, policies, and practices to be unreasonable and to burden or restrict US commerce”. Comments are due by 24 March.
The proposal does several things, including imposing fees on Chinese-owned and built ships (regardless of nationality of the shipping company), and requiring US exports be shipped on US-flagged vessels, with the percentage of cargo required to be carried on these ships increasing over time.
In a submission obtained by DCN carriers engaged in trades in the Pacific with and between island nations, the US, Australia and NZ highlight the critical role shipping links play in the transportation of vital food products and consumer goods, including virtually all imports for some nations and territories. Food safety rules often necessitate that many food products come from the US.
Lines have told the US Congress the USTR proposal is a threat to the continued viability of shipping services from California to the Pacific Islands, including American Samoa, and will cause significant economic harm to the region.
The impact is an estimated additional cost of US$4,285 per TEU. If applied as a surcharge to the existing freight rates, it would more than double the standard freight costs, lines warn.
From Australia and New Zealand, the total number of ships calling American Samoa for example is seven vessels, of which five are Chinese-built. The proposed fees would add US$1.5 million to a call, and based on the size of these vessels, would result in a US$1,365 cost increase per container.
The submission suggests it is likely that vessel owners will reduce the frequency of calls to some destinations as a cost mitigation strategy, and/or reduced the number of calls on service strings.
Carriers want amendments to the proposal to ensure nations will be able to continue to receive essential goods and supplies via existing trade lines. Specifically, they want no disincentives to vessels stopping at multiple ports (which makes economic sense and is a viable strategy to service the smaller island nations) and believe fees should be fair and equitable: for example, on a per unit basis, not per vessel.
The USTR proposals have been widely panned by maritime, economic and trade analysts worldwide. Amongst others the World Shippers Council and BIMCO have warned the policies could disrupt supply chains, raise costs for business and consumers, and backfire on the US if other nations take retaliatory measures.
Brokers have begun reporting container ship and bulker operators, in particular, have begun fixing non-Chinese-built tonnage as a precautionary measure.
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