Overview

1. The Maritime and Shipping Industry is entering unprecedented times.

2. On 2 April 2025, the 47^th President of the United States of America, Donald J Trump, announced sweeping tariffs against almost all its trading partners, unveiling a two-tier tariff structure – a baseline 10% tariff applying universally to all imports from all countries with the exception of Canada and Mexico, and additional “country-specific” reciprocal tariffs based on what the Trump administration deemed “unfair trading practices”[1]. The People’s Republic of China, long seen as a threat to US global dominance, was the hardest hit[2]. This day was widely known as the “Liberation Day”, a term coined by President Trump himself.[3]

3. On 9 April 2025, President Trump issued Executive Order 14269 titled “Restoring America’s Maritime Dominance”, stating, inter alia, that “the commercial shipbuilding capacity and maritime workforce of the United States has been weakened by decades of Government neglect, leading to the decline of a once strong industrial base while simultaneously empowering our adversaries and eroding United States national security”[4].

4. Following Executive Order 14269, on 17 April 2025, the Office of the United States Trade Representative (USTR) issued a final notice of action for its Section 301 investigation on “China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance”, following the proposed actions that USTR originally published in February 2025[5]. According to the USTR’s final notice of action, it proposed the following fees, requirements and restrictions: –
   • Phased Fee on Chinese Vessel Operators and Chinese Vessel Owners
   • Phased Fee on Chinese Built Vessels
   • Phased Fee on Vessel Operators of Foreign Vehicle Carriers
   • Requirement for the use of U.S. Vessels for the maritime transports of a certain percentage of LNG Exports
   • Additional duties on STS Cranes and other cargo handling equipment of China (including containers and certain chassis of China)

5. The fees are not cumulative and only one fee will be applied[6]. That is, either a vessel is subject to the fees set forth in Annexes I, II, or III, or, a vessel is subject to the requirement of Annex IV. If any fee is applied, only one fee will be applied under the terms of the respective Annex.

6. The USTR port fees are slated to go into effect on 14 October 2025, with rates increasing after such time on a phased schedule. This USTR Notice of Final Action also appears to have bipartisan support in the House of Representatives and the Senate, and the steps that are now finalised now were in fact initiated under the previous Biden administration. Therefore, it is worthwhile to consider its practical effects in the context of charterparties, shipbuilding and ship sale and purchase.

Phased Fee on Chinese Vessel Operators and Chinese Vessel Owners

7. Under this phased fee scheme, Vessel Operators of China and Chinese Vessel Owners will be subject to the following fees[7]: –

• • Effective as of April 17, 2025, a fee in the amount of $0 per net ton for the arriving vessel.
  • Effective as of October 14, 2025, a fee in the amount of $50 per net ton for the arriving vessel.
  • Effective as of April 17, 2026, a fee in the amount of $80 per net ton for the arriving vessel.
  • Effective as of April 17, 2027, a fee in the amount of $110 per net ton for the arriving vessel.
  • Effective as of April 17, 2028, a fee in the amount of $140 per net ton for the arriving vessel. The fee will be charged up to five times per year, per vessel.

8. The fee will be charged up to five times per year, per vessel. The vessel operator is responsible for calculating this fee and providing supporting documentation, upon request.

9. The definition of what constitutes a Vessel Owner and a Vessel Operator can be found here.

Phased Fee on Chinese Built Vessels

10. Upon the arrival of a Chinese-built vessel to a U.S. port or point from outside the Customs territory on a particular string, a vessel operator that is not a vessel operator of China, must pay the higher of these two fee calculation methods[8]: –

• • Effective as of April 17, 2025, a fee in the amount of $0 per net ton for the arriving vessel. Effective as of October 14, 2025, a fee in the amount of $18 per net ton for the arriving vessel.
  • Effective as of April 17, 2026, a fee in the amount of $23 per net ton for the arriving vessel.
  • Effective as of April 17, 2027, a fee in the amount of $28 per net ton for the arriving vessel.
  • Effective as of April 17, 2028, a fee in the amount of $33 per net ton for the arriving vessel.

OR

• • Effective as of April 17, 2025, a fee in the amount of $0 for each container discharged.
  • Effective as of: October 14, 2025, a fee in the amount of $120 for each container discharged.
  • Effective as of: April 17, 2026, a fee in the amount of $153 for each container discharged.
  • Effective as of: April 17, 2027, a fee in the amount of $195 for each container discharged.
  • Effective as of: April 17, 2028, a fee in the amount of $250 for each container discharged.

11. The fee will be charged up to five times per year, per vessel.

12. If the per container fee is assessed, the vessel operator must report to US Customs and Border Protection (CBP) the total number of containers discharged at a U.S. port or discharged with an ultimate destination in the Customs territory of the United States.

13. However, CBP will suspend this applicable fee on a particular vessel for a period not to exceed three years if the vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater net tonnage. Owners will be eligible for the remission upon order of, and until delivery of, a U.S.-built vessel. If a prospective vessel owner does not take delivery of the U.S.-built vessel ordered within three years, the fees will become due immediately. Proof of the order must be provided on demand and may include information such as order and contract information related to the order.

14. The fees do not apply to the following Chinese-built Vessels in the following circumstances[9]: –
    • S.-owned or U.S.-flagged vessels enrolled in the Voluntary Intermodal Sealift Agreement, the Maritime Security Program, the Tanker Security Program, or the Cable Security Program;
    • vessels arriving empty or in ballast:
    • vessels with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons;
    • vessels entering a U.S. port in the continental United States from a voyage of less than 2,000 nautical miles from a foreign port or point;
    • S.-owned vessels, where the U.S. entity owning the vessel is controlled by U.S. persons and is at least 75 percent beneficially owned by U.S. persons
    • specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms; and
    • vessels principally identified as “Lakers Vessels” on CBP Form 1300, or its electronic equivalent.

Phased Fee on Vessel Operators of Foreign Vehicle Carriers

15. Upon the entry of a non-U.S. built vessel at the first U.S. port or place from outside the US customs territory, the vessel operator must pay[10]:
    • Effective as of April 17, 2025, a fee of $0 on the entering non-U.S. built vessel.
    • Effective as of October 14, 2025, a fee in the amount of $150 per Car Equivalent Unit (CEU) capacity of the entering non-U.S. built vessel.

16. The vessel operator is responsible for calculating this fee and providing supporting documentation, upon request and must pay all accumulated fees for which that entity is liable as determined by CBP.

Requirement for the use of U.S. Vessels for the maritime transports of a certain percentage of LNG Exports

17. All Liquified Natural Gas (“LNG”) carrier vessels (whether Chinese-built or Chinese-owned or operated) are exempt from the new fees. However, there will be restrictions on transporting LNG via non-US built Vessels. LNG will only be permitted to be exported on vessels that receive a licence, which will take effect from 17 April 2028, with incremental increases up until 17 April 2047, where 15% of all LNG exports must be transported by a U.S. built, U.S. Flagged and U.S. operated Vessel.[11]

Tariffs on Ship-to-Shore (STS) Cranes and Cargo Handling Equipment of China

18. Additional tariffs on certain Chinese cargo handling equipment will also be imposed, which was not part of USTR’s original proposed action. The proposal is based on instructions from Executive Order 14269. In the order, President Trump directed USTR to consider imposing tariffs on “ship-to-shore cranes manufactured, assembled, or made using components of PRC origin, or manufactured anywhere in the world by a company owned, controlled, or substantially influenced by a PRC national;”[12] and “on other cargo handling equipment” as part of the Section 301 action.

19. The proposed rates are as follows: –

Implications on Charterparties, Ship Building Contracts, Ship Sale and Ship Purchase

20. Calculating fees on a net tonnage basis would significantly disadvantage Chinese carriers and carriers operating Chinese-built Vessels, particularly Vessels with the largest capacity such as the Aframax and Suezmax Vessels. Parties may also seek to replace larger vessels with smaller MR tankers, LNG Carriers or non-container carrier vessels to avoid the additional fees.

21. Charterers may also be at risk of incurring high port fees in the event a Vessel calls at a US port. This may be problematic if charterers have no right of refusal of Chinese owned and operated vessels when the Owners nominate a particular Vessel.

22. Another thing that is unclear and is presently being clarified is the exact nature of the USTR port fees. Existing charterparties talk about dues, charges and taxes (or similar language) but it is unclear if this “fee” falls within this category. Parties to a charterparty should consider negotiating a specific clause on this, pending clarification, as the port fees come into effect on 14 October 2025.

23. Parties may also wish to amend their contracts of affreightment to take advantage of the exemption from fees of a voyage of less than 2,000 nautical miles from a foreign port or point. Parties may re-route their Vessels to Canada or Panama, before calling at a US port.

24. In the context of sale and leaseback transactions, Owners who have bought from and leased back to Chinese Vessel Owners should review their agreements to see if they will be liable for any fees if the Vessel were to call at a US port. This is because what constitutes a Vessel Owner is very expansive under the USTR Notice of Final Action and it also covers owners from Hong Kong and Macau.

25. Many vessel and commodity related contracts are long term in nature. As the port fees are expected to come into effect on 14 October 2025, operators and traders need to make long-term plans even if they are presently not exposed, such as negotiating contracts that provide a wider “force majeure” definitions or perhaps introducing an “adverse material market conditions clause”. Owners, operators and/or traders whose contracts are implicated by this need to see if there is room to re-negotiate terms, in order to preserve long-term business relationships.

Conclusion

26. As the USTR port fees come into effect on 14 October 2025, decisions need to be made regarding the ability to pass on/allocate the port fees. That decision needs to be made through the shipping chain, from head owner, charterers, freight forwarders as to their shipping contracts, as well as future contracts.
    
    
27. The USTR Notice of Final Action also brings direct operating cost implications through the shipping chain and may hit profit margins in the long run. Therefore, this will need to be carefully managed. Ultimately, market forces will determine if costs of shipping will become prohibitively expensive – whether through the use of non-chinese built vessels, non-chinese owned vessels, or through paying the port fees, or indeed committing to build commercial vessels in the US. Many calculations need to be made but operators and traders will need to monitor this space carefully to see if this impacts on global demand and supply of goods and commodities, including supply chain implications such as potential delays due to a lack of vessels.

Prepared By: