U.S. Imposes Fees on Chinese Ships Amid Ongoing Trade Tensions
The measure is aimed at countering
China’s dominance of commercial shipbuilding and helping to revitalize the
American industry.
The
Trump administration began charging fees on Chinese ships docking at U.S.
ports, aiming to challenge China’s dominance in commercial
shipbuilding and support domestic shipyards. Chinese authorities threatened
retaliatory fees on American vessels, intensifying trade tensions following
recent disputes over rare earth minerals.
While
supporters argue the fees help address subsidies favoring Chinese shipbuilders,
critics warn they could raise costs and disrupt supply chains, with limited impact
on revitalizing U.S. shipbuilding. Major shipping companies are adjusting
operations to mitigate the levies, and China responded by sanctioning U.S.-linked
Hanwha subsidiaries.
The
fees, part of broader U.S. trade actions including furniture and lumber
tariffs, apply primarily to Chinese-owned or Chinese-built ships, though other foreign
vessels may also face charges.
The
Trump administration broadened its trade war with China on Tuesday, as it began
imposing fees on Chinese ships docking at American ports.
The
long-planned action is intended to counter China’s dominance of commercial shipbuilding
and help revitalize the United States’ own shipbuilding industry, which has withered
over the years.
China’s
Ministry of Transport threatened retaliation on Friday, saying it planned to hit
American vessels with fees when they docked in China. The shipping clash comes as
trade relations between China and the United States are again wobbling. Last week,
after China announced more stringent restrictions on rare earth minerals, President
Trump threatened to impose more tariffs on the country, before tempering his tone
somewhat.
Supporters
of the United States’ shipping measures say that China has used subsidies to gain
an advantage in shipbuilding, and that the fees are a way to deter ocean carriers
from buying Chinese ships.
“Anything we can do to chip away at the disparity
in shipbuilding that exists between the United States and China is to our benefit,”
said Mihir Torsekar, a senior economist at the Coalition for a Prosperous America,
a group that supports many of Mr. Trump’s trade actions.
The
fees will take effect the same day as new tariffs on imported furniture,
kitchen cabinets and lumber. The shipping levies stem from a trade investigation
started under the Biden administration and must be paid by ships owned by Chinese
shipping companies. Non-Chinese shipping lines will have to pay fees when they send
Chinese-built ships to American ports.
Non-Chinese
shipping lines have bought scores of Chinese-made vessels in recent years, and they
are now trying to remove as many as possible from routes to the United States to
avoid the fees.
“Vessel
owners and operators are adjusting fleet deployments to mitigate the impact of the
fees,” said Utsav Mathur, a partner specializing in shipping and commodities at
Norton Rose Fulbright, a law firm.
Shipping
companies have said they do not intend to raise their customers’ rates in response
to the levies.
But
critics of the fees say they will make supply chains less efficient and eventually
push up the cost of imported goods, many of which have been hit with high tariffs
this year.
“The
inefficiencies, along with whatever fees are paid, will raise costs,” said Colin
Grabow, an associate director at the Cato Institute, a research organization that
favors less government regulation of business. “It’s just a matter of when.”
Skeptics
also doubt that the fees will breathe much life into United States’ shipyards or
do much to hold back China’s shipbuilding industry, which has in recent years extended
its lead over Japan’s and South Korea’s.
China
made 60 percent of the world’s large vessels in 2024, up from 44 percent five years
earlier, according to BRS Shipbrokers. American ships can cost up to five times
the amount of those built in Asia. So far this year, China has made 717 large commercial
vessels; the United States just one, according to BRS.
The
new rules are the most stringent for Chinese shipping companies, which cannot avoid
the levies. HSBC, an investment bank, estimated that COSCO, a large Chinese shipping
line, could pay $1.5 billion in fees next year, which the bank said could reduce
COSCO’s operating earnings by nearly three fourths in 2026.
COSCO
did not respond to a request for comment, but in an April statement, the company
said the United States’ fees would “risk undermining the security, resilience, and
orderly operation of global industrial and supply chains.”
Matthew
Funaiole, a vice president at the Center for Strategic and International Studies,
noted that MSC, a Swiss shipping giant, placed orders for 12 large Chinese container
vessels this year. Shipping companies buying from China are “going to get a quality
ship at a low cost in a quick turn time,” Mr. Funaiole said. That, he added, might
outweigh the costs and inconveniences created by the new penalties on Chinese vessels.
MSC declined to comment.
The
United States’ penalties on Chinese ships are unlikely to prompt a rush of orders
for American ships but they could work alongside other efforts aimed at revitalizing
American shipbuilding. Those include bipartisan legislation in Congress that provides
subsidies to the industry, though it is not clear when or if the bill will progress.
Some
new money has recently flowed into American shipyards.
Hanwha,
a conglomerate from South Korea with big shipbuilding operations in the country,
last year bought a shipyard in Philadelphia for $100 million.
Hanwha
recently announced that its ship operating subsidiary had ordered 10 oil and chemical
tankers from the Philadelphia plant, a big order for an American yard. But it may
not be indicative of broader market demand for American ships because one arm of
Hanwha is buying from another.
Ryan
Lynch, the chief executive of Hanwha Shipping, the entity ordering the vessels,
defended the transaction, saying its economics were sound. “We would never recommend
to our board anything other than best practices,” he said. Mr. Lynch declined to
disclose how much Hanwha Shipping was paying for the vessels, saying only that it
was a “market price.”
China
on Tuesday added five American subsidiaries of Hanwha to its sanctions list, accusing
them of “supporting and assisting” the United States in its moves in the shipbuilding
industry.
The
order, which took effect immediately, prohibits Chinese companies or individuals
from doing business with the Hanwha units. Shares of Hanwha Ocean, the conglomerate’s
shipbuilding arm, fell 8 percent on the news.
China’s
Ministry of Transport also said it was launching an investigation into whether other
organizations and individuals had played a role in taking measures against China.
The
Trump administration’s shipping actions don’t target only Chinese ships. All foreign
car-carrying vessels will be subject to fees, with narrow exceptions.
Auto
companies lobbied against the car-carrier fees, saying they could add hundreds of
dollars to the cost of a vehicle. One way to avoid the fees is to buy an American
made car carrier. But shipping analysts said it could take many years for the United
States’ shipbuilding industry to build such a vessel.
“The
idea that these fees will lead to anyone ordering a U.S.-built car carrier are,
I think, extremely remote,” Mr. Grabow of the Cato Institute said.
The
administration is also targeting foreign-built ships that carry liquefied natural
gas, a valuable American export, but it softened the actions against such vessels
following pressure from the oil and gas industry. The United States Trade Representative,
the agency formulating the new shipping rules, said on Friday that it had removed
a provision that would have suspended licenses to export L.N.G. if a certain amount
of the gas was not carried on American made ships.
A
spokeswoman for the trade representative did not respond when asked how the L.N.G.
requirements would be enforced without the threat of suspending export licenses.