On 17 April 2025, the Office of the U.S. Trade Representative (“USTR”) issued a notice of new, revised and proposed actions regarding port fees for Chinese - and other foreign-built ships, as well as for Chinese owners and operators calling at U.S. ports.[1] After a two-day public hearing in March, the initial proposed actions from the February announcement have been moderated. This article seeks to summarise the new and revised, along with proposed, actions.
Background
On 21 February 2025, the USTR proposed actions under the authority of Section 301 of the Trade Act of 1974. The actions aim to eliminate China’s practices targeting the maritime, logistics, and shipbuilding sectors for dominance.[2] On 9 April, the President issued Executive Order 14269, «Restoring America’s Maritime Dominance.» With respect to the actions taken in the previous investigation under the Trade Act, the USTR proceeded to implement actions and proposed actions on 17 April in accordance with Executive Order 14269, Section 5 (a).
Key points from the new, revised and proposed actions[3]
USTR and the Section 301 Committee have reviewed the public comments and the testimony from the two-day public hearing earlier in March and determined that action is appropriate. The actions are provided for in Annexes I, II, III or IV. The actions are not cumulative, which implies that a vessel is either subject to the fees set forth in Annexes I, II or III, or a vessel is subject to the requirements of Annex IV. If any fee is applied, only one fee will be applied under the terms of the respective Annex.
The proposed actions will be implemented in two phases. Initially, for the first 180 days, the applicable fees will be set at $0. In the subsequent first phase, starting on 14 October, fees outlined in Annexes I, II, and III will be established. During the second phase, actions related to Annex IV will be deferred for three years, with fees set to commence on 17 April 2028. The fee structure under the Annexes can be summarised as follows:
Annex I: Service Fee on Chinese Vessel Operators and Vessel Owners
- Fees on Chinese vessel owners and operators based on net tonnage per U.S. voyage, increasing incrementally over the following years. The fees are starting at a rate of $50 per net ton and increasing up until $140 per net ton in April 2028. The fees are capped at five assessments per vessel per year.
Annex II: Service Fee on Vessel Operators of Chinese-Built Vessels
- Fees on operators of Chinese-built ships based on net tonnage or containers discharged, increasing incrementally over the following years. The fees are starting at a rate of $18 per net ton and $120 per container discharged and stopping at $33 per net ton and $250 per container discharged in April 2028.
- There are several exceptions, such as vessels arriving to the U.S. empty or in ballast, vessels below a specific size or capacity thresholds, vessels owned by certain U.S. companies, and other certain specialised vessels. In addition, vessel operators are eligible for a fee remission within three years if they order and take delivery of a U.S.-built vessel of equivalent size. It is important to note that both the order and delivery must occur within the three-years window for the fee remission to apply.
Annex III: Service Fee on Vessel Operators of Foreign-Built Vehicle Carriers
- To incentivise the construction of U.S.-built car carriers, fees are imposed on foreign-built car carriers based on their capacity, at a rate of $150 per Car Equivalent Unit (CEU). Notably, in contrast to the initial proposal, these fees are directed not only at Chinese-built car carriers but at all foreign-built car carriers .
- The fee can be remitted if the owner within three years orders and receives a U.S.-built vessel of equivalent or greater size. Again, it is important to note that both the order and delivery must occur within the three-years window for the fee remission to apply.
Annex IV: Restriction on Certain Maritime Transport Services
- To incentivise U.S.-built liquified natural gas (LNG) vessels, limited restrictions are imposed on transporting LNG via foreign vessels. These restrictions will increase incrementally over 22 years. At least 1% of all LNG intended for exportation by vessel in a calendar year must be exported by a U.S.-built vessel. This percentage increases annually and stops at 15% in April 2047.
In addition, the USTR proposes to assess additional tariffs in Annex V: Tariffs on Ship-to-Shore (STS) Cranes and Cargo Handling Equipment of China. The proposal includes (i) tariffs on STS cranes manufactured, assembled, or made using components of Chinese origin, or manufactured anywhere in the world by a company owned, controlled, or substantially influenced by a Chinese national, and (ii) tariffs on other cargo handling equipment, cf. Section 5 (b) (i) and (ii) in Executive Order 14269. The USTR requests written comments regarding the proposed tariffs in Annex V and has scheduled a public hearing on 19 May 2025. This hearing may lead to further modifications and clarifications to the fee scheme.
Future Perspectives
While the new and revised actions, along with the definitions included by the USTR in each of the Annexes, provide some clarity, enforcement uncertainties remain, and the full ramifications of these actions still need to be considered. High fees and restrictions on maritime transport services could significantly disrupt global shipping routes and logistics networks, leading to heavily increased costs and delays. Various contractual issues may arise, affecting shipbuilding contracts, second-hand vessel sales, charters, leases, and logistics services, amongst others.
Some contracts have proactively addressed the USTR-proposed port fees. For contracts that remain silent, it is crucial to examine terms such as sanctions clauses, force majeure clauses, and change in law provisions under the applicable law. Shipowners and charterers should evaluate the proposal's impact on existing charterparty agreements and exercise caution in negotiating cost and risk allocations in new agreements. Contracts for logistics services may encounter higher costs, necessitating renegotiation to manage increased operational expenses. Like charterparty agreements, service contracts may require provisions for fee allocation, prompting discussions on cost-bearing responsibilities.
For any questions regarding the actions and proposed actions, our experienced shipping lawyers are available to provide guidance and support.
[2] Federal Register :: Restoring America's Maritime Dominance
