On Feb. 21, 2025, the U.S. Trade Representative (USTR) requested comments on proposed actions under Sec. 301 of the Trade Act of 1974 to end China’s practices for global domination of the maritime, logistics and shipbuilding sectors. This culminated a year-long investigation that started when five labor unions petitioned USTR to probe China’s grip on shipping and shipbuilding.
A USTR report from its investigation noted the decline of U.S. shipbuilding and flag carriers, and the dramatic expansion of China’s shipbuilding and ship operating sectors. USTR found China’s state subsidies enabled it to capture over 50% of the global shipbuilding market. Conversely, U.S. shipyards which built 70 ships annually in 1975 are building only five today. China’s dominance is so thorough that 98% of container vessels that call on U.S. ports are now Chinese-built and operated by Chinese ocean carriers or other carriers. As such, USTR’s proposed actions included:
- S. port-entry fees up to $1 million per vessel owned by Chinese maritime operators like state-owned COSCO, or the U.S. could charge $1,000 per net ton of a vessel’s capacity.
- S. port-entry fees up to $1.5 million for non-Chinese shipping companies operating Chinese-built ships.
- Shipping companies with greater than 50% Chinese-built fleets would pay $1 million per vessel’s port-entry regardless of origin.
- Companies with Chinese-built fleet percentages between 25%-50% would pay $750,000.
This is not an exhaustive list of USTR’s proposed actions, but all would have been disruptive. Thus, IHA and 29 other organizations funded an economic study of USTR’s proposed actions. It was done by Trade Partnership Worldwide, LLC and submitted to USTR. This was followed by comments signed by IHA and 300 organizations outlining additional problems with USTR’s proposed actions.
USTR’s final actions released on April 17 show it considered the IHA-funded study that IHSA funded, too, and the broader coalition comments. This is evident from the significant changes USTR made from its initial proposed actions on Feb. 21.
USTR removed fees for vessel operators with Chinese-built ships and changed the port-entry fee structure to net tonnage of a vessel which will apply per U.S. voyage and no more than five times a year. These and other actions start in the fall and there will be two phases.
Phase One fees on Chinese vessel owners/operators are based on net tonnage per voyage starting at $50/NT in 180 days and increasing by $30/NT per year over the next three years. Fees on other operators of Chinese-built ships are based on net tonnage or containers, starting at $18/NT or $120 per container in 180 days and increasing by $5/NT or a proportional amount per container over the next three years.
Phase two fees start in three years and are primarily to incentivize U.S.-built liquified natural gas (LNG) vessels. More details on both phases of USTR’s final actions can be found here: USTR Section 301 Action on China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance.
