UPDATED March 19: PPAI has joined more than 60 trade associations in signing a coalition letter to USTR, opposing the proposed Section 301 China Shipbuilding remedies. The letter is below.
The United States Trade Representative’s proposal to implement fees of up to $1.5 million on Chinese-made ships entering U.S. ports is expected to have significant ramifications on U.S. exports, as well as the broader economy, if put into action.
- 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.
- PPAI has joined nearly 30 other associations in supporting an updated study by Trade Partnership Worldwide that would further evaluate the broader impact of the proposed measures.
These proposed fees could add $600-$800 per container for goods heading in and out of U.S. ports, according to the World Shipping Council.
Nearly all (98%) of U.S. port calls could be subject to fees under the proposal because the fees apply not only to Chinese-built ships but also to any operator with a Chinese-built vessel in its fleet or on order.
With container vessels servicing the U.S. typically calling at three or four U.S. ports on each trip, these fees would add millions in costs to each voyage, resulting in fewer U.S. port calls, especially to small and medium-sized ports, the World Shipping Council says.
Joe Kramek
President/CEO, World Shipping Council
“Policymakers must reconsider these damaging proposals and seek alternative solutions that support American industries,” says Joe Kramek, president and CEO of the World Shipping Council.
PPAI has also seen a draft of an executive order on shipbuilding, which President Donald Trump mentioned during his joint address to Congress.
The draft executive order requires USTR to impose:
- tonnage-based fees on Chinese built or flagged vessels that dock in U.S. ports;
- tariffs on port cargo handling equipment manufactured, assembled or made using China-origin components, or manufactured anywhere in the world by a company owned or controlled by a Chinese person;
- and fees on any vessel that enters a U.S. port, regardless of where it was built or flagged, if that vessel is part of a fleet that includes vessels built or flagged in China.
The draft executive order also requires the U.S. Department of Homeland Security to ensure any foreign origin cargo clearing U.S. Customs and Border Protection at an inland location from the country of land transit (Canada or Mexico) is assessed applicable customs, taxes, tariffs, fees, interest and other charges, plus a 10% service fee for additional costs to CBP.
Negative Consequences For American Businesses
The initial results of the USTR investigation preempting this proposal were announced on January 17, a few days before Donald Trump’s inauguration as president.
An initial study, prepared by Trade Partnership Worldwide, on the ramifications of such actions show that any benefit to domestic shipbuilding would have to be balanced against negative effects on the economy. The projections suggest that it would reduce the U.S. GDP, decrease exports by 2.1% and bring down imports by 0.7%.
The USTR’s proposal has the likely possibility of negative consequences to U.S. businesses in many industries, and that includes promotional products.
“While we haven’t heard direct concerns from our members yet, this fee would increase import costs, disrupt supply chains and delay shipments of key promotional products like apparel, drinkware, bags and tech accessories,” predicts Alok Bhat, market economist, research and public affairs lead at PPAI. “Higher shipping fees and rerouted cargo would likely lead to higher prices, inventory shortages and fulfillment delays, impacting businesses across the industry.”
Alok Bhat
Market Economist, Research & Public Affairs Lead, PPAI
- These developments would potentially coincide with proposed and already implemented tariffs placed by the Trump administration, signaling the onset of an international trade war. The collisions of multiple factors such as these could have significant impacts on the global supply chain.
- Shipping companies may theoretically divert vessels to Canada and Mexico to avoid massive fees, which would rely on U.S. businesses to require trucking or rail routes for shipments. To make matters more complicated, President Donald Trump also recently announced 25% tariffs on imports coming from both countries, some of which are on pause until April.
Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, says that an implementation of such policies would have clear cost-rising ramifications.
“The proposed remedies from USTR in the Section 301 China Shipbuilding investigation are far reaching,” Gold told PPAI Media. “The fines assessed to the ocean carriers will only be passed along to their customers, U.S. importers and exporters. The carriers will incur multi-million dollars’ worth of fines since vessels don’t only arrive at one U.S. port as part of their sailing.
Jonathan Gold
VP of Supply Chain & Customs Policy, National Retail Federation
“This could result in hundreds of dollars of additional costs per container for importers and exporters. It could also result in significant changes to carrier sailings as they may look to just avoid U.S. ports because of the fees. The proposed remedies will not help resolve deficiencies in U.S. shipbuilding which have existed for decades.”
Still Time For Public Comment
There remains a possibility for the affected to be heard. The USTR is seeking public comment on the proposed actions that would lead to the shipping fees. A public hearing will be held on March 24.
The National Retail Federation plans to testify at the hearing.
- The deadline to submit comments is March 24.
- To submit a comment, click here.
“To obtain the elimination of China’s acts, policies and practices, and in light of China’s market power over global supply, pricing and access in the maritime, logistics and shipbuilding sectors, USTR proposes to impose certain fees and restrictions on international maritime transport services related to Chinese ship operators and Chinese-built ships, as well as to promote the transport of U.S. goods on U.S. vessels,” USTR says in its solicitation for comments.
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
