USTR Proposal Could Impact Global Shipping Trade with Fees on Chinese Vessels

The U.S. Trade Representative's Office (USTR) is considering imposing fees and restrictions on Chinese shipping operators and vessels built in China, a move that could significantly disrupt the global shipping industry. A British gas carrier broker has warned that these fees would negatively impact the ethane-ethylene trade, as the majority of these ships are manufactured in China.

Another European chemical shipbroker emphasized that most vessels in the market today are of Chinese origin. The imposition of these fees may lead to many ships exiting the trade, subsequently driving up freight costs, which could create a ripple effect across other shipping sectors.

Importantly, these proposed fees are not tied to the nationality of the vessels but are aimed squarely at the Chinese shipbuilding market. The USTR plans to hold public hearings on the proposed actions under Section 301, which seeks to address what it deems unfair foreign practices affecting U.S. commerce.

This investigation follows petitions submitted by five labor unions, prompting the USTR to explore these actions. Under the proposed framework, ships operated by Chinese companies would incur a fee of $1 million, or $1,000 per net ton. Additionally, vessels built in China would face fees ranging from $500,000 to $1 million, depending on the proportion of Chinese-built ships in their fleet.

These costs would be cumulative and apply to every docking at U.S. ports, regardless of the vessel type. In their proposal, the USTR highlighted that China’s shipbuilding market share has surged from 5% in 1999 to over 50% in 2023, along with owning over 19% of the global merchant fleet.