If the office of the United States Trade Representative goes through with its proposal to implement fees of up to $1.5 million on Chinese-made ships entering U.S. ports, the U.S. economy would suffer substantial losses.
- The proposal is part of the USTR’s investigation, which initially began in 2024 and has been conducted under Section 301 of the Trade Act of 1974, into China’s dominance in the global shipping sector.
USTR’s proposed remedies, which also include penalties on operators ordering from China and U.S.-flagged shipping mandates, would reduce U.S. GDP by up to $6.2 billion, according to a new study by Trade Partnership Worldwide, which was supported by PPAI and nearly 30 other associations.
- Exports would decline by up to $21.4 billion, worsening the U.S. trade deficit.
- Industries that rely on cost-effective shipping, including manufacturing, retail and agriculture, would experience higher costs and lose the ability to remain competitive.
The promotional products industry wouldn’t be immune to the negative impact.
- Suppliers would face higher production and logistics costs, reducing profit margins.
- Distributors would have to pass on the increased costs to end buyers, making branded merchandise less attractive for corporate campaigns.
“PPAI strongly urges USTR to consider the unintended economic consequences of the proposed Section 301 remedies, particularly their strain on U.S. supply chains, cost structures and business operations,” Drew Holmgreen, president and CEO of PPAI, said in comments submitted to USTR ahead of a public hearing on March 24.
Drew Holmgreen
President & CEO, PPAI
“While these measures are intended to support domestic shipbuilding, they risk creating higher costs for importers, disrupting logistics networks and weakening the competitiveness of industries that rely on global trade, including promotional products.”
View PPAI’s comments to the USTR below.
Supply Chain Disruptions
USTR’s proposed remedies would increase shipping costs by 8% to 14%, leading to higher prices for imported goods, according to the new study.
- More than 60% of U.S. imports rely on maritime shipping, meaning increased costs would affect nearly all industries.
- Supply chain delays would worsen, impacting retailers, manufacturers and distributors.
“Promo distributors may have to increase inventory stocking, tying up more working capital,” says Alok Bhat, market economist, research and public affairs lead at PPAI. “Rush order surcharges could rise, adding further cost burdens.”
Alok Bhat
Market Economist, Research & Public Affairs Lead, PPAI
The new study also suggests that port traffic could decline by up to 11%, as shipping companies reroute through Canada or Mexico to avoid fees. As a result, U.S. warehousing and trucking jobs would be lost due to reduced port activity and the price of everyday goods would rise due to supply chain disruptions.
- Bhat says that distributors using on-demand print and fulfillment services could see delays in processing and shipping customer orders.
- Meanwhile, suppliers storing bulk inventory in West Coast fulfillment centers may face higher handling fees as warehouses adjust to fewer shipments.
“Most of PPAI’s nearly 15,000 members are small and mid-sized businesses, meaning they lack the purchasing power to absorb rising costs like large corporate brands can,” Bhat says. “Larger distributors and suppliers may secure better freight rates, leaving smaller competitors at a disadvantage. Independent distributors may lose contracts if corporate buyers see the costs of promotional product rise significantly.”
PPAI’s Stance
Rather than broad, punitive measures that raise costs for U.S. businesses, PPAI supports:
- Investing in domestic infrastructure to improve U.S. shipbuilding and port logistics.
- Negotiating trade agreements to counter China’s subsidies without penalizing U.S. importers.
- Ensuring that key industries, including promotional products, remain cost-competitive in global trade.
PPAI urges policymakers to pursue alternative solutions that strengthen U.S. manufacturing and supply chains without creating additional burdens for businesses that rely on international trade.
In addition to supporting the new study, PPAI joined more than 260 trade associations in signing a coalition letter to USTR, opposing the proposed Section 301 China shipbuilding remedies. The letter is below.
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
