USTR Proposed Port Fees Spark Industry Concern

The proposal from the United States Trade Representative (USTR) to impose significant port fees on vessels built or operated by Chinese companies has sparked widespread concern throughout the global shipping industry. At stake is the potential for substantial disruption across international trade routes, elevated shipping costs, and negative impacts on both large and small maritime carriers.

The proposed fees—ranging up to $1.5 million per U.S. port call—stem from a year-long USTR investigation into China’s subsidization of its shipbuilding industry. According to the report, China’s government subsidies have enabled Chinese shipyards to significantly increase their share of the global market, rising from just 5% in 1999 to over half of the world’s cargo ship production today. By contrast, U.S. shipyards accounted for less than 0.01% of global commercial ship production last year. The USTR asserts that these subsidies create unfair competitive advantages for Chinese shipbuilders, undermining American manufacturing capacity and strategic maritime autonomy.

Despite these findings, the USTR’s proposal has drawn strong criticism from a wide array of stakeholders who argue that the measures, though intended to support U.S. shipbuilding, may instead cause widespread economic harm. More than 250 comments have been submitted to the USTR, primarily opposing the proposed fees, emphasizing that the measures would severely impact various sectors of the economy and could inadvertently penalize U.S.-based maritime operators who rely on Chinese-built vessels.

Maritime operators engaged in regional and smaller-scale trades, such as those serving the Caribbean and Central American markets, have been among the most vocal critics. These operators highlight that a flat-rate fee per port call disproportionately burdens smaller ships and lower-value cargoes, potentially rendering regional trade routes financially unsustainable. Caribbean-based shipping companies warned explicitly in their submissions that imposing such fees would effectively eliminate their ability to service smaller islands and countries that depend heavily on supplies imported through U.S. ports.

Additionally, U.S.-based shipping operators have raised concerns regarding the retrospective nature of these fees. Numerous American companies invested in Chinese-built ships in past decades, often due to the lack of competitive alternatives at domestic shipyards. Now, under the USTR’s proposal, these companies could face substantial financial penalties for commercial decisions made years ago, at times when American shipyards were either unavailable or unable to deliver timely vessel construction. Operators have indicated this could result in service cancellations, office closures, layoffs of American workers, and significant redirection of vessels away from U.S. ports to alternative international markets.

Economic analyses of the proposal indicate significant indirect impacts on American consumers and businesses. Industry groups estimate that the proposed fees could add approximately $600 to $800 in costs per shipping container, costs likely to be passed directly to consumers through higher prices on imported goods. Similarly, U.S. exporters, particularly in agriculture, manufacturing, and bulk cargo sectors, could face significant challenges, as higher shipping costs could reduce the global competitiveness of American products.

Operators specializing in breakbulk and multipurpose vessel trades have also expressed substantial opposition. Due to the nature of short-sea shipping—characterized by frequent port calls—multipurpose vessels transporting critical cargo like industrial components, steel coils, or heavy machinery would see disproportionate increases in operating expenses. In some estimates provided during the USTR comment period, these fees could exceed the total annual revenue generated by such vessels in the U.S., effectively driving many out of the American market altogether.

To mitigate these risks, maritime companies and trade associations have offered several suggestions for modifying the proposal. Recommendations include implementing a tiered fee structure based on vessel tonnage, applying fees exclusively to ships operated directly by Chinese companies, or introducing a phased approach to allow industry participants sufficient time to adapt their vessel fleets. Additionally, many stakeholders advocate for specific exemptions for sectors with no viable U.S.-built ship alternatives, particularly multipurpose and specialized heavy-lift vessels.

Port authorities and related organizations caution that unintended consequences could extend far beyond shipping operators themselves. Faced with substantial new costs, ocean carriers might divert their vessels to Canadian or Mexican ports to avoid U.S. levies. Such diversion could strain port infrastructure in these neighboring countries while diminishing cargo volumes at smaller U.S. ports such as Oakland, Charleston, and Philadelphia. Resulting decreases in business would likely translate into job losses and reduced infrastructure investment in these economically critical regions.

Moreover, several industry analyses have raised questions about whether the USTR’s proposed measures would effectively achieve the stated goal of revitalizing American shipbuilding. Critics argue that punitive measures alone will not solve fundamental issues like a shortage of skilled American shipbuilders, limited shipyard capacity, and insufficient domestic infrastructure investments. Instead, they suggest proactive solutions such as increased government support for workforce training, targeted investments in U.S. maritime infrastructure, and collaborative partnerships with allied countries known for strong shipbuilding sectors like South Korea and Japan.

Analysts also point to broader geopolitical implications of the proposed policy. The measures risk creating a two-tiered global maritime market, distinguishing between ships constructed in China and those built elsewhere. This division could lead to operational uncertainty, higher costs, and reduced market flexibility for global shipping companies. Already, shipbrokers and charterers have expressed hesitation to engage long-term contracts with Chinese-built vessels due to uncertainty about future U.S. port access and associated liabilities.

Given the significant potential for disruption, businesses are already exercising caution in making new contractual commitments. For instance, certain project cargoes crucial to U.S. infrastructure initiatives—such as steel and industrial components—have experienced delays as shippers await clarity on whether these levies will be implemented.

While a minority of stakeholders have publicly supported the USTR proposal as a necessary measure to counter China’s maritime dominance, a consensus is emerging among maritime industry representatives that the unintended economic impacts could far outweigh the policy’s intended benefits. As the USTR prepares to finalize its determination, stakeholders across shipping, logistics, and export industries continue to call for careful reconsideration of these proposed penalties.

The coming weeks will be critical, as the USTR weighs the extensive feedback received from industry stakeholders against strategic policy objectives. Should the measures proceed without modification, the repercussions will likely be felt across global trade routes, reshaping patterns of maritime commerce and potentially undermining the competitiveness of U.S. businesses reliant on international shipping.

PNG WORLDWIDE is actively monitoring developments in this matter. We remain committed to keeping our customers fully informed as the situation evolves.