US not prepared to win economic war against China-built containerships

To address concerns from various business interests, including U.S. farmers and global ocean carriers, the U.S. government is contemplating imposing hefty fines on containerships built in China that call on U.S. ports. This move aims to promote shipbuilding in the U.S., but it clashes with the reality of the global ocean trade market where almost all container traffic will soon be carried on vessels constructed in China.

The World Shipping Council reveals that approximately 98% of the global fleet would be affected by these fees, as they apply to both existing Chinese-built ships and those on order by carriers. Currently, 90% of the world’s vessels are subject to these charges. The total number of port calls made by deep-sea container liner vessels in the U.S. in 2024 was 12,410.

The U.S. Trade Representative is conducting hearings to consider implementing penalties, following an investigation initiated under President Joe Biden. The Trump administration has continued this inquiry as part of its broader global economic and trade war efforts. Proposed penalties include substantial levies on Chinese-made ships arriving at U.S. ports, with service fees ranging up to $1.5 million per port call for non-Chinese-owned ocean carriers with fleets containing Chinese-built vessels.

These proposed port fees could significantly impact the U.S. economy, as the liner shipping industry directly or indirectly transports $1.5 trillion in U.S. trade annually, supporting over 6.4 million jobs and contributing over $1.1 trillion to the GDP. The fees could add $600–$800 per container, doubling the cost of shipping U.S. exports and disproportionately affecting American farmers.

In response to the USTR proposal, over 300 trade associations and numerous companies have filed comments opposing the fees. The U.S. government’s concerns stem from a surge in Chinese ship orders. If implemented, these fees could lead to congestion at larger ports while reducing service at smaller ports, impacting port labor, trucking, rail, and warehousing jobs.

The existing U.S. law, the Jones Act, mandates that certain vessels must be built in the U.S. However, there are concerns that limiting vessel options and imposing retroactive fees on shipping companies could harm the American economy. A study commissioned by trade groups warns that the proposed remedies could result in economic losses, declining exports, and a worsening trade deficit.

The U.S. Department of Transportation Maritime Administration reports that the U.S. currently has 182 flagged ships, but U.S.-flagged, operated, and built ships are not competitive. The World Shipping Council’s members, who operate a significant portion of the U.S. Maritime Security Program Fleet, stress the importance of a forward-looking strategy to revitalize the U.S. maritime industry.

Overall, the proposed fees could have far-reaching consequences on the U.S. economy, affecting various sectors and potentially hindering economic growth. The debate continues as stakeholders weigh the implications of these proposed penalties on the shipping industry and the broader economy.