Chinese-Built Vessels Might Need To Pay $1 Million Before Entering A U.S. Port
The Trump Government would levy a fee on using Chinese commercial vessels, which could help in countering Beijing’s growing maritime prowess.
This plan for Chinese-built vessels was drafted by the office of the U.S Trade Representative along with mandates needing a part of U.S. goods to be transported on American ships.
This development stems from a recent investigation into Beijing’s shipping sector, logistics and ship construction practices which started at the time of Biden and ended with a report 4 days before President Trump took office.
The planned fee would mean additional costs for Americans as high shipping costs will be passed to consumers in the form of higher prices. This could also present an opportunity for South Korean and Japanese shipbuilders.
It remains to be seen whether this step could revive American shipping and its capacity has declined despite protections to encourage the use of U.S.-built and operated ships.
The global shipbuilding industry is dominated by China, South Korea and Japan which account for more than 90 per cent of commercial shipbuilding.
China’s share in the market has risen to over 50% in 2023 and it also owns 19% of the commercial fleet as of January 2024, while controlling production of 95% of shipping containers, per reports.
On the other hand, the United States is 19th in the world in commercial shipbuilding and manufactures less than 5 vessels annually, while China constructs over 1700, said Katherine Tai, who worked as the Trade Representative for Joe Biden.
This can be attributed to low prices & labour standards and low labour costs which undercut competition.
However, relying on China can lead to economic security risks, per the trade office.
The proposed plans will be imposed under Section 301 of the 1974 Trade Act after being subjected to public reviews, including a public hearing in March 2025.
The U.S Trade Representative is proposing a levy of 1 million dollars when Chinese-built ships will enter a U.S. port.
Another proposal is that a minimum of one per cent of American goods exported via waterways will have to be carried on US-flagged and operated ships.
The threshold would rise to 15% after 7 years along with the requirement that the ships should be constructed in the United States, boosting American shipbuilding.
The Trump administration also announced a 10% tariff on all Chinese goods over Beijing’s failure to stop the fentanyl trade. Tariffs could also be announced on sectors like automobiles, pharmaceuticals, lumber and semiconductors by April.
The maritime domain is a leverage point that Beijing can use, as the world depends on its ships for supplies. Any disruption to that system could lead to supply chain shocks which the U.S wants to avoid.
Though the government is hopeful, the proposed plans will likely be opposed by retailers since added costs would be passed to consumers.
References: The Hindu Business Line, Bloomberg
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