The Trump administration has indicated it will likely water down its proposed port fees on Chinese-built and -operated vessels.
U.S. Trade Representative (USTR) Jamieson Greer told a Senate Finance Committee hearing Tuesday that the administration was revising the plan based on public feedback.
The administration is considering delaying implementation and adopting new fee structures designed to reduce the overall cost to visiting vessels and soften any potential blow to American businesses, according to various reports.
Related Stories
When the port fee recommendations were first unveiled in February, they included proposed fees of $1.5 million per port call for Chinese-built ships, and up to $1 million for Chinese-operated ships, among other potential charges. Over time, the provisions also sought to move 15 percent of U.S. exports onto U.S.-flagged vessels.
“They’re not all going to be implemented. They’re not all going to be stacked,” Greer said, implying that some fees may not be cumulative. Under the currently proposed rules, a Chinese-built ship sailing for Cosco Shipping would have to pay up to $3.5 million in penalties at each port call in the U.S.
Reports from Reuters and The Wall Street Journal outline potential options the administration is considering.
Reuters said the USTR may charge a fee adjusted based on the number of Chinese-built ships in a company’s fleet. As is, a foreign container shipping firm could have five China-built vessels in a fleet of 50, yet all those ships would be subject to the fee.
Both publications highlighted another potential plan to base the fees largely on vessel tonnage and capacity, resulting in lower fees for smaller ships coming into U.S. ports. The USTR office also may look to ease the charges on ships carrying agricultural exports like soybeans and timber.
Greer did not provide additional details on the proposed remedies during the hearing, but said the agency wants to “make sure that we have the right amount of time, the right incentives, to bring shipbuilding here without impacting our economy.”
Revitalizing American shipbuilding is one of the main goals the Trump administration wants to accomplish with these economic actions, which are a result of the USTR’s ruling that China has an “unreasonable” dominance of the shipbuilding, maritime and logistics sectors.
This is a direct violation of Section 301 trade laws—the often-used justification for U.S. penalties on China, including its now-triple-digit tariffs on imports from the country.
China’s foreign ministry reiterated its stance on proposed port fees in a Wednesday press conference.
“Imposing port fees and levying tariffs on cargo handling facilities hurt the U.S. itself as well as others. They will not only push up global maritime shipping costs and destabilize global industrial and supply chains, but also increase inflationary pressure in the U.S. and hurt the interests of American consumers and businesses,” said spokesperson Lin Jian. “The practice will ultimately fail to revitalize the U.S. shipbuilding industry. We urge the U.S. to respect facts and multilateral rules, and stop its wrongdoings at once. China will do what is necessary to defend its lawful rights and interests.”
Most of the public comments on the port fee proposals as well as the parties involved in the two-day hearing on the topic in late March, were critical of the initial recommendations.
Retailers, shipping companies, port operators and farmers alike all pointed to disadvantages that would result in higher costs for goods that were passed along to the consumer, as well as fewer U.S. exports, higher freight rates, skipped port calls, lengthier delivery times and job losses.
Some in the maritime field panned the recommendations as being too vague, and often confusing, regarding who would be responsible for paying fees.
Additionally, most of the ocean carrier giants already either have a large portion of their fleet—or their current orderbook—originating from Chinese shipyards. South Korea-based HMM (Hyundai Merchant Marine) and Taiwan-based Yang Ming and Evergreen are the three major carriers that are mostly insulated from the potential fees, according to data from container shipping research firm Alphaliner.
The trans-Pacific trade is heavily reliant on Chinese vessels. Roughly 17 percent of U.S. container imports from the Far East come on Chinese carriers, said container shipping analysis firm Linerlytica.
“The most impacted sectors are container shipping and car carriers, given their consolidated nature, and high proportion of payable fees under the proposed framework,” Jefferies analyst Omar Nokta wrote in an April 2 note. “However, all shipping segments would be affected, given the level of disruption likely to take place as operators shift vessels to minimize exposure to U.S. fees.”
The USTR is expected to finalize its proposals on April 17. An implementation hearing is to be scheduled for mid-May.
According to Reuters, any finalized measures may not be adopted until November.
