A major policy re-think by the Office of the US Trade Representative to heavily penalise China-linked shipping calling in the United States has occurred.
The shift took place following extensive industry and commercial backlash. Numerous submissions to the public policy consultation had heavily criticised the original policy; many different types of potentially affected businesses including importers, exporters, carriers, and ports, among others, described the policy in the most disparaging terms.
However, industry analysts have continued to express grave concerns with the watered-d0own proposals, which, nonetheless, still heavily penalise the shipping industry – particularly container ships and car carriers.
“The [World Shipping Council] is urging the Administration to reconsider this counterproductive measure, which risks harming U.S. consumers, manufacturers, and farmers without delivering meaningful progress toward revitalizing the U.S. maritime industry,” reads a statement from the World Shipping Council.
Summary of the revised policy proposals
The US Trade Representative has decided, following the investigation, public consultation (in which about 600 or so submissions were received) that services fees will be imposed:
- the maritime transport services of Chinese ship operators and shipowners
- on the maritime transport services of operators using China-built vessels
- service fees on the transport services of operators of non-US-built vehicle carriers
Additionally there will be restrictions on the maritime transport services for US Liquefied Natural Gas, alongside additional tariffs on ship-to-shore cranes and other China-linked cargo handling equipment.
A further consultation will take place regarding these proposals.
What is a vessel?
The term “vessel” has the meaning defined in 19 C.F.R. § 4.0(a), which states: “every description of water craft or other contrivance used or capable of being used as a means of transportation on water, but does not include aircraft”.
Phased fee on Chinese vessel operators and vessel owners
A fee based on the net tonnage of a vessel will be applied to any ship that is Chinese-operated or owned; the fee will be applied per rotation or string of port calls (i.e. it won’t be applied on a per port call basis). The fee will be US$0 for the first 180 days, will rise to US$50 per net ton and then will increase over the next three years. A “vessel operator” is defined as the entity identified as such on the US Customs documents. The definition of a Chinese “operator” or “owner” is very wide and would appear to cover both direct and indirect ownership and control. It includes such concepts as citizenship of China, having headquarters in China, companies being controlled by Chinese citizens, having at least 25% of a company’s voting interest being held indirectly by Chinese governments, and more.
Phased fee on Chinese-built vessels
One of two fees, whichever is the higher, will be imposed. Either it will be a fee based on the net tonnage of a vessel, or a fee based on a container. Fees will be applied per rotation or string of port calls (i.e. it won’t be applied on a per port call basis) and fees will be set at US$0 for the first 180 days and will increase over three years. Fees based on net tonnage will start at US$18 per net ton (once the 180 day period expires), and fees per container will start at US$120 (once the $0-rated period expires). Fees per NT will increase by $5 NT per year, and fees per container will increase by the same proportional amount e.g. in year two, the container fees will increase to US$154 per container).
Some vessels will be exempt e.g. ships enrolled in certain US Maritime Administration Programmes, vessels arriving empty or in ballast etc.
Phased fee on non-US vehicle carriers
A fee, again set at $0 for the first 180 days, will be set at US$150 per Car Equivalent Unit on any non-U.S.-built vehicle carrier. Fee remissions are available for up to three years if the operator orders and takes delivery of a U.S. built vessel of at lest equivalent size. A “vehicle carrier” is defined if it is identified as such on U.S. customs documentation. The USTR determination notes, for information only, that vehicle carriers are ships that are designed for wheeled or tracked cargo that can load itself on-board.
A U.S. built vessel must be (1) built in the US (2) documented under the laws of the US (3) have all major components of the hull or superstructure manufactured (including from the initial melting stage) in the US (4) a list of components, such as shipboard anchor, air circuit breakers, machine tools, auxiliary equipment and more, are built in the United States.
Restrictions on Liquefied Natural Gas transport
After three years, the US Trade Rep would require the use of US vessels (US flagged and operated) for the maritime transport of LNG exports. In 2029 and 2030 this would be one percent; two percent in 2032; three percent in 2033 and 34; and then rising increments of one percent every one or two years until 15% is reached in 2047. In 2024, the US exported 11.9 billion cubic feet per day of LNG (about 336.97 million cubic metres), according to the US Energy Information Administration. Australia and Qatar are the world’s two next-largest exports with exports of about 10.2 Bcf/d to 10.7 Bcf/d, according to the US EIA.
Additional duties on cranes, containers and chassis
Duties of up to 100 percent will be imposed on Ship-to-Shore cranes manufactured, assembled, or made using components of Chinese origin, or manufactured anywhere in the world by a company owned, controlled, or substantially influenced by a Chinese national. Additional duties of up to 100 percent will be imposed on certain cargo handling equipment of China.
A further consultation is planned. Written comments can be filed at https://comments.ustr.gov/s/ by, it appears, May 8, 2025. To submit written comments, use the docket on the portal entitled ‘Request for Comments on Proposed Action in the Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance.’
