Commentary
The Trump administration is planning millions of dollars worth of new port fees on China’s shipping companies starting sometime after March 24.
The Office of the U.S. Trade Representative (USTR) provided
details of the fees, which will likely grow shipyards in the United States, Japan, and South Korea. The fees are accompanied by minimum percentages that require U.S. shipping of U.S. exports, which over the next decade will incentivize the rebuilding of a U.S. merchant marine decimated by decades of unmitigated free trade.
In an emergency, like a war or pandemic, the United States would need more shipyards and ships. Some shipyards would likely convert to naval shipbuilding. Overreliance on Asian shipyards, which the Chinese navy could potentially sever from the United States, would entail real risks. The regime in Beijing ordered the People’s Liberation Army to be ready to conquer Taiwan by
2027, and in turn, the Biden administration ordered the U.S. Navy to prepare to surge capacity to 80 percent that year.
The new port fees are cumulative and in addition to existing fees and tariffs. They could reach up to tens of millions of dollars per U.S. port call by large container ships owned by a Chinese shipper or originating in China. If a ship is Chinese-built and Chinese-owned, the fees would build on each other. The more Chinese-built ships that a particular company has on order from Chinese shipyards over the coming two years, the higher the fee on its ships. This
element of extraterritoriality is meant to reduce China’s shipbuilding globally rather than just diverting Chinese ships to non-U.S. routes. Shipping is, after all, fungible.
Chinese shipping companies with large fleets built in China would pay the most when docking at U.S. ports. The largest Chinese cargo ship, the MSC Tessa, for example, has a net tonnage of
36,284. The new fees could charge this ship as much as $1,000 per net ton, which would be more than $36 million in addition to other comparatively smaller fees. For context, the record charged of a cargo ship transiting the Panama Canal was
$1.1 million.
The fees would also stack atop 25 percent tariffs on China from President Donald Trump’s first term and 10 percent punitive tariffs related to China’s manufacturing of fentanyl precursors. In addition, the proposed changes would immediately require 1 percent of U.S. exports carried on U.S.-built ships. This percentage would increase by approximately 2 percent annually for seven years to reach 15 percent.
The USTR is also proposing to ban the use of China’s National Transportation and Logistics Public Information Platform (LOGINK).
LOGINK is free for shippers and ports to use in tracking global container cargo, down to the granular level of packages within containers. LOGINK data, including information about the shipment of U.S. military materiel, is likely acquired by the Chinese Communist Party (CCP).
China’s shipbuilding industry and merchant marine displaced the U.S. industries when the ideology of free trade advantaged cheaper labor in China, which outcompeted more expensive U.S. welders, engineers, and mariners. China’s cheaper ships resulted in more international trade, but it also led to a loss of U.S. shipyards and shipping industry jobs.
In 1975, the United States was the top global shipbuilder, at 70 ships per year. We are now ranked 19th, with just
five per year. Meanwhile, China has grown into a shipbuilding behemoth, from under 5 percent of global tonnage in 1999 to over 50 percent today. China currently builds more than 1,700 ships per year.
Beijing’s subsidies of its shipping industry also make it difficult for the United States to compete, according to the Biden administration’s U.S. trade representative, Katherine Tai. She issued a report saying that China’s targeting of U.S. shipping is actionable per Section 301 of the
Trade Act of 1974, for example, by imposing duties, fees, and restrictions. Tai requested a consultation with Beijing on this matter, but Beijing declined.
The Trump administration’s acting trade representative, Juan Millan, agreed with Tai, writing in his Feb. 21 notice that “for nearly three decades, China has targeted the maritime, logistics, and shipbuilding sectors for dominance and has employed increasingly aggressive and specific targets in pursuing dominance.”
Millan noted that the regime in Beijing had achieved dominance through “severely disadvantaging U.S. companies, workers, and the U.S. economy generally through lessened competition and commercial opportunities and through the creation of economic security risks from dependencies and vulnerabilities.” He wrote that China’s dominance was “unreasonable because of China’s extraordinary control over its economic actors.”
China’s shipping industry can be mobilized during wartime to serve Beijing’s military, including by converting civilian shipyards to naval shipyards. Existing container ships can convert to weapons platforms through the use of
containerized cruise missile deployments.
The risks of allowing the CCP’s navy, coast guard, and “maritime militia” of armed and subsidized fishing boats to grow so numerous are clear. They daily harass Taiwanese, Japanese, Philippine, Vietnamese,
Australian, and New Zealand airlines, fishermen, coast guard, and naval forces. The People’s Liberation Army has built artificial islands on Philippine territory, for example, at Mischief Reef in the South China Sea, and stolen entire island groups, for example, the Paracel Islands from Vietnam. Beijing is also eyeing Japan’s southernmost islands.
Containing China’s global shipping expansion—and growing our shipping capabilities—is a laudable goal. However, beware of any
unintended consequences. We need to ensure that while utilizing port fees against the CCP, we do not at the same time hurt our industries.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
