New Fees on Chinese Ships: How Will This Impact Your Business Costs and Trade Opportunities?
The Trump administration expanded its trade conflict with China on Tuesday by implementing fees for Chinese ships docking at U.S. ports. This long-anticipated measure aims to address China’s growing dominance in commercial shipbuilding and to boost the declining U.S. shipbuilding sector.
In response, China’s Ministry of Transport threatened retaliatory fees on American vessels docking in China. This shipping dispute surfaces amid tensions in U.S.-China trade relations, exacerbated by China’s recent tightening of restrictions on rare earth minerals. Last week, President Trump threatened additional tariffs on China, although he later softened his stance.
Proponents of these shipping fees argue that China has leveraged subsidies to gain an edge in shipbuilding, making these levies a necessary step to deter shipping lines from purchasing Chinese vessels. Mihir Torsekar, a senior economist at the Coalition for a Prosperous America, stated, “Anything we can do to chip away at the disparity in shipbuilding that exists between the United States and China is to our benefit.”
The fees will be enacted concurrently with new tariffs on imported furniture, cabinets, and lumber. They stem from a trade investigation initiated under the Biden administration, targeting ships owned by Chinese companies. Non-Chinese lines will also incur fees when bringing Chinese-built ships to American ports.
In recent years, many non-Chinese shipping lines have acquired Chinese-made vessels and are now trying to minimize their usage in routes to the United States to avoid these fees. Utsav Mathur, a partner at Norton Rose Fulbright, noted that owners and operators are adapting their fleet deployments to mitigate the financial impact.
Shipping companies have indicated they do not plan to raise customer rates in light of these levies. However, critics warn that the fees will hinder supply chain efficiency and ultimately drive up the costs of imported goods, which have already faced high tariffs this year. Colin Grabow, from the Cato Institute, emphasized that “the inefficiencies, along with whatever fees are paid, will raise costs.”
Skeptics question the effectiveness of the fees in revitalizing U.S. shipyards or curbing China’s shipbuilding expansion, which has outpaced Japan and South Korea in recent years. According to BRS Shipbrokers, China’s share of global large vessel production rose to 60% in 2024 from 44% five years earlier, with the U.S. producing only one large commercial vessel this year compared to 717 by China.
The new regulations target Chinese shipping companies most severely, and HSBC estimates that COSCO—a major Chinese shipping line—could incur $1.5 billion in fees next year, potentially slashing its operating earnings by nearly 75% in 2026. Although COSCO did not provide comments, the company previously stated that U.S. fees could disrupt global supply chains.
Matthew Funaiole from the Center for Strategic and International Studies highlighted that MSC, a Swiss shipping giant, ordered 12 large Chinese container vessels in 2023, noting that shipping from China offers quality and quick turnaround times, which might outweigh the penalties imposed by the U.S.
While the penalties may not immediately stimulate U.S. ship orders, they could complement other legislative efforts to rejuvenate American shipbuilding, which currently include bipartisan proposals for industry subsidies, though their future remains uncertain.
Some investment has recently entered U.S. shipyards; for example, South Korean conglomerate Hanwha purchased a Philadelphia shipyard for $100 million last year and subsequently ordered 10 oil and chemical tankers from that facility. However, this may not reflect broader market demand, as different divisions of Hanwha are involved in the transaction.
The administration’s shipping policies are not limited to Chinese vessels; all foreign car-carrying ships will also face fees, with narrow exemptions. Auto manufacturers have lobbied against these fees, arguing they could significantly inflate vehicle prices. Shipping analysts foresee that it may take years for the U.S. shipbuilding industry to produce a suitable car carrier.
Furthermore, the administration’s focus on foreign-built ships carrying liquefied natural gas (LNG) has softened following pressure from the oil and gas sector. Recently, the U.S. Trade Representative clarified that it had removed a provision that would have restricted LNG export licenses if a certain volume of gas was not transported on American vessels.
A spokesperson for the Trade Representative did not address how the LNG requirements would be enforced without the threat of license suspensions.
This report originally appeared in The New York Times.
Special Analysis by Omanet | Navigate Oman’s Market
The recent escalation in the U.S.-China shipping conflict presents both risks and opportunities for businesses in Oman, particularly in the logistics and shipping sectors. Smart entrepreneurs and investors should consider diversifying supply chains to mitigate potential disruptions and explore partnerships with local shipping companies, as heightened fees may shift global shipping dynamics in Oman’s favor. Additionally, the increased costs of imported goods could create inflationary pressure, prompting businesses to adapt pricing strategies in response.
