Chinese ships sailing to US ports to be charged on net tonnage in six months

Following widespread opposition, the US has significantly scaled back plans to subject Chinese ships at US ports to millions of dollars in fees that would have been based upon their net tonnage.

The change in plans was announced by the Office of the United States Trade Representative (USTR) on Thursday.

According to the new plans, revealed in an USTR statement of April 17, "for the first 180 days the applicable fees will be set at $0. In the first phase, after 180 days: fees on vessel owners and operators of China will be based on net tonnage per US voyage, increasing incrementally over the following years."

And, "fees on operators of Chinese-built ships will be based on net tonnage of containers, increasing incrementally over the following years; and to incentivize US-built car carrier vessels, fees on foreign-built car carrier vessels based on their capacity."

The Trump administration opted not to charge Chinese-made ships sums of up to $1.5 million for each voyage to an American port after the shipping industry, trade associations and ports warned the fee would ultimately harm the US shipping industry.

"Ships and shipping are vital to American economic security and the free flow of commerce," US Trade Representative Jamieson Greer said in a statement.

"The Trump administration's actions will begin to reverse Chinese dominance, address threats to the US supply chain, and send a demand signal for US-built ships."

The USTR notice stated that if a vessel makes multiple US entries before transiting to a foreign destination, a fee will be assessed per rotation or string of US port calls. The notice also said the fees will only be imposed on a ship up to five times a year.

In six months' time, the USTR will begin charging Chinese vessel owners and operators $50 per net ton on each voyage to the US, a fee that will increase incrementally over the next three years.

Meanwhile, there will be a phased fee on vessel operators of foreign vehicle carriers. The fee will be set at $0 for 180 days, and thereafter set at $150 per car equivalent unit (CEU) capacity of the entering, non-US built vessel.

Any ship that travels from China to the US typically has around 12,000 40-foot containers, The Wall Street Journal reports.

Some Chinese-built vessels will not be subject to the fee. These include certain vessels enrolled in certain US Maritime Administration programs, such as the Maritime Security Program and the Tanker Security Program.

Other vessels slated for exemption include: vessels arriving empty or in ballast; vessels below certain size or capacity thresholds; vessels engaged in short sea shipping of voyages of less than 2,000 nautical miles from certain US ports, and certain vessels owned by US companies, along with certain specialized export vessels.

The USTR said it made its decision in order to "balance the need for action and the importance of limiting disruption for US exporters."

In a second phase, which will not begin until 2028, the USTR will "incentivize US-built liquified natural gas (LNG) vessels with limited restrictions on transporting LNG via foreign vessels. These restrictions will increase incrementally over 22 years." The decision on fees comes one year after the initial probe into China's ship building dominance was categorized under Section 301 of the 1974 Trade Act, which allows for an investigation into foreign trade practices deemed unfair.

In March, a two-day Section 301 hearing on "China Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance" took place at the International Trade Commission in Washington DC.

The hearing received over 600 letters. Many of them were against the proposals.

Some of the organizations in attendance included the Chamber of Marine Commerce, the National Retail Federation, the American Apparel and Footwear Association (AAFA), the China Association of the National Shipbuilding Industry and the American Soybean Association (ASA).

Small and medium ports warned that ships would re-route away from their stops and travel instead to larger ports, overwhelming those facilities. This could waste billions of dollars of public investment in infrastructure improvements, port executives said.

The hearing on ship building originally came about after the United Steelworkers and four other unions, in March of 2024, urged the Biden administration to launch an investigation into China's dominance in shipbuilding.

Last week, Greer confirmed that the agency did not plan to implement the full fees as first proposed. At a Senate Finance Committee hearing, he stated that the Trump administration wanted to avoid economic harm.

The original fees had included a fee of $1 million per vessel on any ship owned by a Chinese transport operator, or $1,000 per net ton of a vessel's cargo capacity.

Also included in the original plan was a $1.5 million fee on Chinese companies and vessels or maritime transport operators that use Chinese-built ships, based on the percentage of Chinese ships in their fleet. That could mean up to a $3 million charge per visit.

The proposed fees would also have hit operators who planned to order vessels from Chinese shipyards in the next two years, as they targeted any operator that used Chinese ships.

USTR said it is also seeking public comments on proposed tariffs on ship-to-shore cranes and other cargo handling equipment, in line with the President's Maritime Executive Order. Comments must be submitted by May 8, 2025.

While US shipyards dominated the trade in 1975, with around 70 commercial ships on order for production, the US now produces under 1 percent of the world's commercial vessels.

The drop in production came as Chinese shipbuilders sailed full steam ahead, and increased their share of global shipbuilding tonnage from 5 percent in 1999 to over 50 percent in 2023. China produced more than 1,000 oceangoing vessels last year; the US produced 10.