Last Friday, the U.S. Trade Representative (the “USTR”) unveiled a proposal to impose heavy port fees on Chinese shipping operators and operators of Chinese-built vessels. The USTR announced this proposal pursuant to its authority under Sections 301(b) and (c) of the Trade Act of 1974, following its determination – in a probe that began in March 2024 – that China is involved in unfair trade practices in the maritime, logistics, and shipbuilding sectors.

For Chinese-owned operators, such as Cosco, the proposal imposes a service fee on each vessel of up to $1 million, or $1,000 per net ton of the vessel’s capacity, for each U.S. port of call. For non-Chinese owned operators with fleets containing Chinese-built vessels, the service fee is up to $1.5 million for each U.S. port of call, depending on the percentage of Chinese-built vessels in that operator’s fleet, and is imposed on any vessel in that operator’s fleet which calls on a U.S. port, regardless of whether such vessel is Chinese-built.

The USTR proposal also targets newbuildings: operators with 50% or more of their orders in Chinese shipyards, or vessels expected to be delivered by Chinese shipyards over the next 24 months, will be charged up to $1 million per vessel per entrance to a U.S. port. This is in addition to the service fee charged for such port of call.

To further promote the U.S. shipbuilding industry, the proposal provides that the service fees described above “may be refunded, on a calendar year basis, in an amount up to $1 million per entry into a U.S. port of a U.S.-built vessel through which the operator is providing international transport services.”

The proposal also imposes graduated restrictions on U.S. exports: starting this year, 1% of all U.S. products exported by vessel must be exported on U.S.-flagged vessels of U.S. operators, gradually increasing over the following seven years to ultimately require that at least 15% of all U.S. goods must be exported on U.S.-flagged vessels of U.S. operators, of which 5% must also be U.S.-built.

The proposal is open to public commentary until a hearing scheduled for March 24, 2025, after which President Trump will decide whether the new fees will be imposed.

For further information or questions, contact a member of the Seward & Kissel team.