Fees proposed by the U.S. Trade Representative (USTR) on Chinese-owned and operated vessels calling U.S. ports are scheduled to kick in on October 14. But with the deadline a mere 20 weeks away, pressing questions remain over how those fees would be collected, how they would be assessed, and perhaps most importantly, how the U.S. plans to build its own fleet of container ships to mitigate the substantial economic impacts the fees are expected to create.
“One thing we’re all thirsty for is more clarity and certainty,” World Shipping Council CEO Joe Kramek said during remarks delivered at 2025’s Agriculture Transportation Coalition (AgTC) Conference in Tacoma, Washington on June 18.
During the Biden administration, a group of steel unions petitioned the USTR over claims that China has been “choking out all competitors” in the steel and shipbuilding industries, while asserting that China’s dominance in the global shipbuilding sector poses a national security threat to the U.S. According to data from freight intelligence platform Xeneta, Chinese-built container ships make up 54% of shipping giant COSCO’s existing fleet and 41% of CMA CGM’s, as well as 100% and 54% of their respective order books for undelivered vessels.
In the final days of Biden’s presidency, the USTR determined that China had indeed manipulated the shipbuilding and steel sectors to its advantage. Then in February, steel unions urged the nascent Trump administration to impose “tough penalties” on Chinese vessels, and to focus on reviving the long-neglected U.S. shipbuilding industry. Weeks later, the USTR put forth a proposal to start charging non-Chinese shipping companies operating Chinese-built vessels flat fees of up to $1.5 million per U.S. port entry.
According to law firm Holland & Knight, public criticism of new and previously proposed fees continues, although the final measures contain some notable exemptions that narrow the targeted scope.
The final version set to take effect October 14 now starts fees at $50 per net ton for vessels with Chinese operators or owners, and $18 per net ton for Chinese-built ships (or $120 per container discharged, whichever is higher). Even so, “there are major problems” Kramek said, given that the USTR has still not provided clarity on several key aspects of the proposal, including how it’s defining the owner and operator of a vessel.
“A common method of purchasing ships is a lease buyback,” he explained. “If you get lease buyback financing from a Chinese bank, they’re titled but you’re operating the vessel – so, who’s the owner?”
The USTR also has yet to provide details of who exactly would be collecting the fees, or how the money would be directed back into U.S. shipbuilding. Because the fees would first go into the general treasury, Congress would need to get involved to appropriate that money into a separate account, and then pass legislation telling the Treasury Department how to divide the money up among shipyards, steel workers, and any other necessary shipbuilding infrastructure. With just months to go before the fees come into force, Congress has yet to pass any such legislation.
Kramek also expressed skepticism over how the USTR used its Section 301 authority to justify the fees in the first place. In practice, Section 301 of the U.S. Trade Act gives the USTR the authority to respond to unfair trade practices that undercut the competitiveness of an existing U.S. industrial sector. But, it’s difficult to argue that the decline of American shipbuilding is simply due to China’s dominance in recent years. Japan dominated the industry in the 70s, then South Korea in the 90s, and China has only risen to prominence in the last two decades, long after U.S. shipbuilding had declined to mostly building tugs, barges and vessels for government or military use.
Further, attempts to protect U.S. shipbuilding in the past, via the Jones Act of 1920, have failed dismally, with many industry experts calling for its end. The Jones Act, which required that all goods moved between U.S. ports be carried on U.S.-built ships, was originally designed to boost the country’s maritime industry. Instead, what it did was create a protected market that stifled competition, drove up shipbuilding costs, and ultimately weakened the very industry it aimed to support.
Today, the U.S. builds roughly 0.2% of the world’s oceangoing commercial ships measured by gross tonnage, while China, South Korea and Japan account for a combined 90% of global commercial shipbuilding, according to data from McKinsey. And while Kramek noted that the industry at large supports a reversal of that trend, “unfortunately, the conditions for that just haven’t been created yet,” with the U.S. already sorely lacking in shipyards and infrastructure needed to affordably build large container ships at scale. That’s also without accounting for the impacts the fees are expected to have across the maritime industry, which are likely to be passed on to importers and then consumers.
“We don’t want to increase prices on consumers, but that’s what these fees are going to do,” he predicted. “A natural reaction for our members is to take Chinese-built tonnage off U.S. routes, which also means you might not get the best ships calling the U.S. — there are a lot of issues.”
Leading up to October, Kramek said that WSC has become a “frequent flier” at the White House’s shipbuilding office, in hopes of advocating for further changes to the USTR’s proposal before it takes effect. And although it’s been “a challenging space to work in,” Kramek said that he’s encouraged by the fact that the Trump administration has continued to work with the groups like the WSC on “steering in the right direction.”
“The good news is the USTR is listening,” he shared.
