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The U.S. Trade Representative’s (USTR) recent proposal...

The U.S. Trade Representative’s (USTR) recent proposal to impose steep port fees—up to $1.5 million per call—on vessels built in or operated by China has ignited a fierce debate across global industries and trade blocs. This measure, justified by a Section 301 investigation into China’s alleged manipulation and dominance in the shipbuilding and maritime sectors, is being touted by some as a bold step toward economic sovereignty. However, the broader consensus among industry stakeholders appears to be one of deep concern, with critics warning that the policy may result in unintended consequences far graver than the issue it seeks to address.

From the outset, the hearings at the USTR showcased a divided response. While some groups—such as the Alliance for American Manufacturing and certain U.S. offshore marine service operators—voiced strong support, citing national security and industrial independence, the vast majority of industry representatives voiced opposition. The World Shipping Council, the National Council of Farmer Cooperatives, the American Petroleum Institute, and energy exporters all highlighted one common concern: rising costs and logistical disruptions. Their fear is not theoretical; it’s rooted in the fact that Chinese-built ships represent a substantial portion of global maritime capacity—nearly 30% of container fleets and close to half of dry bulk carriers. The petroleum and energy sector, in particular, has sounded alarm bells. Chinese-built tankers currently carry a significant portion of U.S. oil and refined products. The American Petroleum Institute warned that the proposed fees could slash U.S. crude exports by nearly 20% and saddle consumers with up to $30 billion in additional costs annually. Ethanol exporters, facing a record year, also anticipate reduced competitiveness and increased volatility if the measure moves forward. U.S. ethanol prices have already begun to fall amid the policy uncertainty. Shipping companies, traders, and port authorities argue that the fee structure, if enacted, will cascade down supply chains, affecting not just exporters, but consumers. With Chinese-built ships responsible for nearly one-fifth of U.S. port calls in February 2025, the scale of exposure is significant. And because larger carriers like Maersk, MSC, and ZIM rely heavily on Chinese-built tonnage, the fees would likely distort the competitive landscape by privileging operators with non-Chinese fleets—if such capacity can even meet global demand.

What makes the proposal even more contentious is the lack of near-term alternatives. U.S. shipbuilding is effectively dormant, producing only a handful of vessels annually, compared to China’s staggering 1,700. While policymakers envision attracting South Korean and Japanese builders to establish production in the U.S., such transitions will take years, if not decades, to materialize. In the meantime, fees could drive ships away from U.S. ports, encourage workarounds like offshore transshipment hubs, and diminish the use of smaller U.S. ports, as testified by the American Association of Port Authorities.

Ultimately, the USTR’s proposal underscores a very real and pressing problem: China’s dominance in the shipbuilding industry and the strategic vulnerability this creates. However, the proposed remedy risks being overly blunt and economically disruptive. While a recalibration of trade and industrial policy is warranted, it must be strategic, multilateral, and sensitive to the complex interdependencies of the global economy.

Sale and Purchase

Dry:

It seems that USTR proposal has already started to affect the SnP market. This week, 13 bulk carriers changed ownership, with 10 built in Japan and only 3 in China. On the Newcastlemax Sector, the “Global Commander”- 208K/2010 Universal was sold for region USD 32.5-33 mills to Chinese buyers. Winning International acquired the Capesize “Cape Unity” - 180K/2007 Imabari for USD 22.2 mills. The Kamsarmax “Wangaratta”- 82K/2011 Tsuneishi was sold for USD 17.2 mills to Chinese buyers, with surveys due in June. On the Panamax sector, the “Magic Callisto” - 75K/2012 Sasebo and the “Magic Eclipse”- 75K/2011 Sasebo found new owners for USD 28 mills enbloc. Greek buyers acquired the Ultramax “Servette”- 64K/2020 Nantong Xiangyu for USD 31.7 mills basis 3-year BBHP. On the Supramax sector, the “Teleri M” - 56K/2013 JMU was sold for USD 16.5 mills to clients of Vosco, while the “Fortune Wing”- 56K/2011 Mitsui changed hands for high USD 15 mills.

Wet:

On the tanker S&P activity, four vessels were sold, all of which were non-Chinese built. The Aframax “P. Yanbu” - 105K/2011 Sumitomo sold for USD 39 mills. On the MR1 sector, the “SW Cap Ferrat I” - 36K/2001 STX was sold for high USD 7 mills to Chinese buyers. On the small tanker, clients of Seven Islands Shipping acquired the “Owl 3” - 13K/2008 build in Samho yard for USD 11 mills, while the StSt “Strinda” - 20K/2006 Fukuoka was sold for USD 15.9 mills to clients of GMS.

Xclusiv Shipbrokers Inc.