The Trump administration has had a rip-roaring start to its presidential term, marked by foreign policies that have thrown trade flows and international relations into disarray. One of the most controversial proposals from the United States Trade Representative (USTR) is a plan to impose port fees on operators or vessels linked to China. Depending on how the somewhat ambiguous press release is interpreted, this could cost shipowners up to US$3.5 million per U.S. port visit if all proposed fee structures are enacted.
There are three primary ways these fees may be applied:
- Service Fee on Chinese Operators: Chinese operators could be charged up to US$1,000 per net ton of the vessel’s capacity, or up to US$1 million per port visit.
- Service Fee on China-Built Vessels: China-built vessels could face service fees ranging from US$500,000 to US$1.5 million, depending on the proportion of China-built vessels in the fleet.
- Service Fee on Operators with Chinese Newbuild Orders: Fleets with Chinese newbuilds scheduled may incur service fees of US$500,000 to US$1 million, based on the percentage of newbuild orders placed with Chinese shipyards.
Should this proposal become a reality, it would be cause for concern given that approximately 47% of the global dry bulk fleet is built in China. When we examine the impact on various dry bulk vessel sizes, the breakdown of China-built vessels that called at U.S. ports in 2024 reveals that 37% belonged to the Handysize segment, 35% were Supramaxes/Ultramaxes, 25% were Panamaxes, and just 3% were Capesizes. This is not surprising, given that the main dry bulk commodities exported from the U.S. – grain and coal – typically involve vessels ranging from Panamax to Handysize for grain, and primarily Panamax and Supramax/Ultramax vessels for coal.
If enacted, this policy could fuel the development of a two-tier market, where non-China affiliated vessels command a premium over their Chinese-affiliated counterparts for U.S. port calls. The availability of tonnage able to call at U.S. ports could also shrink sharply, driving up freight rates for U.S. trades and making U.S. grain and coal exports less competitive. Meanwhile, non-U.S. markets could experience a glut of Chinese-affiliated tonnage, which would weigh on freight rates.
To circumvent the charges, some operators may look to create separate companies for their vessels. Another potential outcome is the rise of transshipping, with China-affiliated vessels opting to load and discharge at nearby countries to avoid the fees, leaving non-China vessels to handle shorter haul trips into U.S. ports.
All that’s left now is to wait with bated breath to see if this proposal will materialize – but will it? We look to March 25th, when a public hearing will be held to assess the viability of the initiative and decide on its approval. However, the final decision will likely rest with U.S. President Trump, who has been known to introduce measures as bargaining tools without fully implementing them. Given that skyrocketing inflation and increased recessionary risks in the U.S. are likely consequences of this proposal, it seems unlikely that these rules, if enacted, will remain in place for an extended period.
