USTR announces fees on Chinese ships at U.S. ports, with some ag relief

Starting in October, the U.S. will impose port fees on Chinese-made ships and Chinese operators based on cargo volumes, the Office of the U.S. Trade Representative said on Thursday. But ag exporters will see some relief as the measures will not apply to ships that arrive empty to transport U.S. commodities or to those on shorter routes.

Chinese operators and vessel owners will face a port fee of $50 per net ton starting in 180 days, which will increase by $30 a year over the next three years, according to a USTR fact sheet. Operators of Chinese-made ships will also face a new fee of $18 per net ton or $120 per container, whichever is higher. These fees will also increase by $5 per net ton annually until 2028, with container fees increasing proportionally.

The measures, USTR argues, will “disincentivize the use of Chinese shipping and Chinese-built ships, thereby providing leverage on China to change its acts, policies, and practices, and send a critically needed demand signal for U.S.-built ships.”

The fees will be applied per U.S. voyage, the fact sheet says, and not at each U.S. port call, as had been initially proposed. The fees will also only be issued up to five times per year on any given ship.

Chinese-built ships on shipping routes to the U.S. from locations less than 2,000 nautical miles away, including from ports in the Great Lakes or Caribbean regions, will also be exempt, as will ships arriving to the U.S. from overseas U.S. territories.

Agriculture producers had warned that the fees could impose particularly steep costs for bulk commodity exporters, given Chinese-made vessels make up more than half of all port calls from dry bulk carriers. But USTR provided some relief in the final measures by exempting Chinese-built ships that arrive to the U.S. empty to export bulk commodities.

Companies that purchase a U.S.-made vessel will also be eligible to eliminate fees on a similar-sized vessel for up to three years.

In three years, the U.S. will adopt a second phase of measures that will affect vessels transporting liquefied natural gas and limit its transportation on foreign ships, the fact sheet says. These forthcoming measures will phase in incrementally over the following 22 years.

"Ships and shipping are vital to American economic security and the free flow of commerce," USTR Jamieson Greer said in a statement on the measures. "The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships."

 It’s easy to be “in the know” about agriculture news from coast to coast! Sign up for a FREE month of Agri-Pulse news. Simply click here.

The new fees stand to affect a significant volume of U.S.-bound vessels. China is responsible for around half of the annual global ship production, according to the United Nations Conference on Trade and Development. 

The measures are the outcome of an investigation into Chinese shipbuilding practices launched under the Biden administration. The probe, carried out under Section 301 of the Trade Act of 1974, found that China engages in a raft of unfair and nonmarket practices to boost its domestic shipbuilding sector and has contributed to the decline of the U.S. shipbuilding industry.

USTR issued a menu of possible countermeasures in February that included a proposal to require a share of all U.S. exports to be transported on U.S.-flagged and U.S.-built vessels and a flat port fee of up to $1.5 million per docking. After collecting more than 600 comments on the proposals and hearing testimony from across U.S. industries at a two-day hearing last month, USTR did not include either measure in the actions unveiled Thursday.

Mike Koehne, who sits on the board of directors of the American Soybean Association, warned policymakers at that hearing that applying a fee each time a vessel docks in the U.S. would lead to significant increases to shipping costs for U.S. ag exporters as operators passed the fees along to customers.

Operators also appealed to officials to exempt short-range routes, like those in the Great Lakes and Caribbean. They warned that additional port fees would make the routes economically unviable and drive trade to other modes of transport, causing congestion.

Similarly, operators urged policymakers to pivot from the flat fee model initially proposed and to adopt something that reflected cargo values.

“One size does not fit all,” Hannah Bowlby, chair of the Ontario Marine Council argued. “Low-value goods and small vessels can't be treated the same as long hauls.”

Notably, USTR’s announced measures do not take into account cargo values, only weight, meaning the cost burdens will be disproportionately felt by low-value goods shippers.

Some U.S. ag groups met Thursday's announcement with a sigh of relief, noting that the uncertainty around what measures were coming had prompted overseas customers to delay purchases. 

U.S. Wheat Associates and the National Association of Wheat Growers thanked "USTR for considering concerns and feedback from the agricultural community," they said in a statement. 

"This move means a lot to farmers and customers around the world,” USW Chairman Clark Hamilton, said. “We want to thank them for their efforts to balance the need for action against these Chinese maritime practices with the potential for harm to our export competitiveness.”

For more news, go to Agri-Pulse.com.