Shipping lines that call at a U.S. port will soon have to pay penalties if they operate vessels manufactured in China. The fees are hefty and range up to USD 1.5 billion per call. Should the penalties become law, imports discharged at U.S. ports will likely become significantly more expensive for U.S. consumers since box carriers will pass these additional costs on to their customers.
Not a day goes by without new bad news for the global economy, coming from Capitol Hill in Washington. No sooner had the Transpacific Maritime Conference (held in Long Beach) ended on 05MAR25, than Jamieson Greer, Trump’s new trade representative, surprised the shipping companies with this move: vessels calling at U.S. ports must pay drastic fees if parts of their fleets were manufactured in China. In this way, the U.S. government wants to weaken the Chinese industry and bring parts of maritime production back home to the States. That is the vague plan, conceived and announced by Greer.
Provided, the Greer initiative becomes law – photo: private
Stiff penalties to harm China
A closer look at these announced port tariffs shows that they are considerable. Shipping companies operating fleets consisting of 50+ boats, including one or more boats manufactured in China, are to pay one billion USD for each call at a U.S. port. If their vessels call at three or four different U.S. harbors, which is standard, the costs easily triple or quadruple. In the case of fleets consisting of 25 to 49 China manufactured vessels, shipowners will have to pay 750,000 USD per call. For a Chinese industrial share of less than 25%, USD 500,000 per port is due. And the grotesque thing is that shipping lines such as Maersk, MSC, K-Line, Hapag-Lloyd and others will all have to pay the same amount even if just a single vessel they operate was manufactured in China, regardless of whether it calls any U.S. port or not.
Ultimately, U.S. consumers pay the bill
Managers of major shipping companies and representatives of leading maritime associations are alarmed by this news from Washington. “Any disruption has negative consequences for global supply chains,” warns Martin Kröger, Managing Director of the German Shipowners’ Association (VDR). Goods brought to the USA by sea would become more expensive, as the ocean carriers will pass on the increased costs to their customers. Ultimately, the U.S. consumer, as last link in the supply chain, will have to shoulder the higher prices payable at supermarket checkouts. In view of Greer’s punitive tariffs, shipping companies might stop serving the U.S. altogether or alternatively only call at one or two ports instead of three and four as is usually done. “I wouldn’t rule out a boycott of U.S. ports by some Asian or European ocean liners – at least temporarily,” an expert told CargoForwarder Global.
According to Kröger, around 70% of all newbuilds currently come from Chinese shipyards. If production were to be brought back to the USA, shipping companies would have to pay 3 to 4 times as much per vessel in comparison. “It is a completely unrealistic assessment that, with these price differences and the wage disparities between American and Chinese shipyard workers, it would be possible to renationalize shipbuilding in the USA,” states expert Kröger. In addition, he points out that the maritime industry is already facing huge expenses to finance the decarbonization of the fleets. Any additional burden would be poison not only for shipowners, but also for consumers, who would ultimately have to pay the final bill.
Floating fossils
The Jones Act, resolved in 1920, shows what protectionist policies ultimately lead to. It stipulates that only ships manufactured in the USA, owned by U.S. citizens and operated by them, were allowed to transport goods between U.S. ports and in U.S. territorial waters. By banning foreign competitors from access to U.S. ports, U.S. companies would benefit, and shipyard capacity including know-how maintained. The outcome of this nationalistic policy is an eye opener for all those who want to see, says Martin Kröger: “Today, the U.S.-flagged fleet of commercial vessels is the oldest in the world.” Or to put it more drastically: these floating fossils pose a risk to crews and the environment and should be towed to a ship graveyard to be dismantled. The sooner, the better.
