THE US Trade Representative announced a plan on Friday to impose steep US port fees on Chinese shipping companies, Chinese-built ships, and ship operators with newbuilding orders at Chinese yards.

The sweeping proposal — which also includes new US export cargo preference rules — is in response to the USTR investigation into Chinese shipbuilding and maritime practices initiated in March 2024 at the behest of US labour unions. The USTR determined in January that China engaged in unfair practices.

The USTR is accepting public comment on its action plan through March 24, when it will hold a pubic hearing. The decision on whether to move forward will ultimately be up to one person: US president Donald Trump.

The USTR action plan would sharply increase costs for a large number of vessels calling at US ports, costs that would be passed along to US importers and exporters via surcharges (in the case of container shipping), charter party clauses (in the case of bulk commodity shipping) or higher freight rates due to curtailment of US services.

Targeting Chinese operators

Under the proposed action published in the Federal Register on Friday, any “vessel operator of China”, a definition that would include Cosco, would be charged for any vessel call in the US, regardless of where a ship was built.

The rate charged to a “Chinese maritime transport operator” would be $1,000 per net tonne, up to $1m per call (most commercial ships serving the US are far above 1,000 net tonnes so the charge would be $1m per call).

Container lines make multiple port calls per US service loop, which would multiply the fees. For example, Asia-US east coast container services typically make two to three US port calls, equating to a charge of $2m-$3m for every service loop.

In addition to being a major owner of very large crude carriers, Cosco is a member of container shipping’s Ocean Alliance, together with France’s CMA CGM, Taiwan’s Evergreen and Cosco subsidiary OOCL. Alliance members share ships and slots. Ocean Alliance is the world’s largest container shipping alliance and has a major footprint in US import and export supply chains.

In addition, other shipping lines have vessel-sharing agreements with the Ocean Alliance. Ocean Network Express has a VSA with the Ocean Alliance in the Mediterranean-US east coast trade.

Targeting operators with Chinese-built ships

The USTR proposal also targets Chinese-built ships. To avoid the fee, these vessels could be redeployed to non-US services.

The port fee for Chinese-built ships would be up to $1.5m for every US call.

Under one proposal, port fees would be based on the share of Chinese-built ships in an operator’s fleet.

For those with 50% or more Chinese-built ships in their on-the-water fleet, each US port call by a Chinese-built ship would cost $1m. For those with fleets of 26%-49% Chinese-built ships, the port fee would be $750,000 per call. For those with over 0% and up to 25%, the operator would pay $500,000 per port call.

There is also an alternate proposal to charge $1m per port call for operators with fleets with 25% or more Chinese-built ships.

The way that the USTR proposal is written, it appears that the $1m port fee charged to Chinese maritime transport operators like Cosco is in addition to the port fee for operators of Chinese-built ships (although one way to read the language is that it maxes out at $1.5m per call).

Targeting operators with ships on order in China

The fees don’t stop at Chinese maritime companies and Chinese-built ships on the water. There’s more.

The USTR proposal calls for port fees to be charged to any operators with ships built at Chinese yards that are ordered or expected to be delivered “within the next 24 months” (following a final rule implementation).

These are described as “additional fees”, implying that they are on top of port fees for calls by existing Chinese-built ships and vessels of Chinese maritime transport operators.

The additional fee would be $1m per US port call for any operator with over 50% of its newbuilding orders at Chinese yards; $750,000 per call for those with 26-49% of their orders at Chinese yards; and $500,000 per US call for any operator that has any orders at Chinese yards, up to 25% of the fleet.

The USTR recommendations also include an alternate proposal that would charge $1m per US call to operators with 25% or more of their orders at Chinese yards.

A workaround for these port fees could be to put tonnage on order in China into a different company, and only call in the US with ships under an operating company that does not have Chinese orders.

If so, this would accelerate the bifurcation of global shipping that is already well underway — the rise of so-called “parallel” fleets.

Creating new US export cargo preference

The SHIPS for America Act — which was introduced in the last US Congress and is expected to be reintroduced in the current one — included cargo preference rules for both US exports and imports. The USTR proposal includes cargo preferences for US exports.

Starting at the date of implementation, it calls for at least 1% of all US exports per year — meaning all container, dry bulk and tanker shipments — to be carried aboard US-flagged vessels of US operators.

Beginning two years after implementation, it requires 3% of US exports on US-flagged ships of US operators. Starting in year three, the percentage goes up to 5%, with 3% on US-built vessels (which do not exist yet in sufficient numbers).

In year seven and thereafter, it would require at least 15% of US exports to be transported by US-flagged and US-operated vessels, with 5% on US-built vessels.

For this cargo-preference schedule to work, it would first require a large number of foreign-flagged vessels to be reflagged to the US, raising the question of whether there would be sufficient US crew to man those ships.

It would then require a massive wave of US shipbuilding with shorter delivery schedules than have historically been the case. US yards have not built a new tanker since 2017. They have not built a liquefied natural gas carrier since 1980.