The United States Trade Representative (“USTR”) has proposed Section 301 actions that seek to counteract practices in the Chinese shipbuilding industry that the USTR believes burden or restrict U.S. commerce. Under Section 301, if the USTR concludes that another country’s unfair trade policies harm U.S. commerce, the USTR can impose duties and other import restrictions. The proposed shipping fees include several specific charges aimed at Chinese maritime transport operators and those using Chinese-built vessels. A service fee is proposed for Chinese maritime transport operators, which could be up to $1,000,000 per entrance of any vessel to a U.S. port, or alternatively, up to $1,000 per net ton of the vessel’s capacity. The notice also proposes fees based on the percentage of Chinese-made vessels in an operator’s fleet. Operators with 50% or more of their fleet made up of Chinese-built vessels could be charged up to $1,000,000 per vessel entrance to a U.S. port. Those with 25% to 50% could face fees up to $750,000, and those with less than 25% could be charged up to $500,000 per entrance.
Further, the USTR proposes fees for operators with prospective orders for Chinese vessels. Operators with 50% or more of their vessel orders in Chinese shipyards, or expected to be delivered by Chinese shipyards over the next 24 months, could be charged additional fees up to $1,000,000 per vessel entrance to a U.S. port. Those with 25% to 50% of their orders in Chinese shipyards could face fees up to $750,000, and those with less than 25% could be charged up to $500,000. On the other hand, the USTR notice suggests service fee remission for maritime transport via U.S.-built vessels, allowing operators to receive remission of up to $1,000,000 per entry into a U.S. port of a U.S.-built vessel.
In addition to the proposed fees, the USTR proposes to restrict transport of U.S. goods to U.S. maritime transport over time, with the goal of having 15% of U.S. goods per calendar year shipped on U.S.-Flagged, U.S.-built vessels, by U.S. operators within seven years of the Section 301 action’s effective date.
This proposed action differs in two ways from some of President Trump’s recent trade actions. First, the Section 301 process adds more structure and predictability than some of the other actions that have been announced so far. Second, placing tariffs on something other than imported goods is a novel remedy. While the entity operating the vessels would pay the fees, however, vessel operators would most likely pass costs on to those booking the freight, which – like tariffs – eventually increases the cost of the imported goods.
Comments on the proposed action are due by March 24, 2025.