A Cosco container ship, China’s dominant shipping company, arrives at the Port of Savannah in Garden City, Georgia. The Trump Administration has broadened its trade war with China with the start of docking fees for Chinese ships at American ports, a measure aimed at countering the country’s dominance of commercial shipbuilding and revitalising America’s. Photo / Erin Schaff, The New York Times
A Cosco container ship, China’s dominant shipping company, arrives at the Port of Savannah in Garden City, Georgia. The Trump Administration has broadened its trade war with China with the start of docking fees for Chinese ships at American ports, a measure aimed at countering the country’s dominance of commercial shipbuilding and revitalising America’s. Photo / Erin Schaff, The New York Times
The Trump Administration broadened its trade war with China today, as it began imposing fees on Chinese ships docking at American ports.
The long-planned action is intended to counter China’s dominance of commercial shipbuilding and help revitalise the United States’ own shipbuilding industry, which has withered over the years.
China’s Ministry of Transport threatened retaliation, saying it planned to hit American vessels with fees when they docked in China.
The shipping clash comes as trade relations between China and the United States are again wobbling.
Last week, after China announced more stringent restrictions on rare earth minerals, US President Donald Trump threatened to impose more tariffs on the country, before tempering his tone somewhat.
Supporters of the US’ shipping measures say that China has used subsidies to gain an advantage in shipbuilding, and that the fees are a way to deter ocean carriers from buying Chinese ships.
“Anything we can do to chip away at the disparity in shipbuilding that exists between the US and China is to our benefit,” said Mihir Torsekar, a senior economist at the Coalition for a Prosperous America, a group that supports many of Trump’s trade actions.
The fees will take effect the same day as new tariffs on imported furniture, kitchen cabinets and lumber.
The shipping levies stem from a trade investigation started under the Biden Administration and must be paid by ships owned by Chinese shipping companies.
Non-Chinese shipping lines will have to pay fees when they send Chinese-built ships to American ports.
Non-Chinese shipping lines have bought scores of Chinese-made vessels in recent years, and they are now trying to remove as many as possible from routes to the US to avoid the fees.
“Vessel owners and operators are adjusting fleet deployments to mitigate the impact of the fees,” said Utsav Mathur, a partner specialising in shipping and commodities at Norton Rose Fulbright, a law firm.
Shipping companies have said they do not intend to raise their customers’ rates in response to the levies.
Critics of the fees say they will make supply chains less efficient and eventually push up the cost of imported goods, many of which have been hit with high tariffs this year.
“The inefficiencies, along with whatever fees are paid, will raise costs,” said Colin Grabow, an associate director at the Cato Institute, a research organisation that favours less government regulation of business. “It’s just a matter of when.”
Sceptics also doubt that the fees will breathe much life into American shipyards or do much to hold back China’s shipbuilding industry, which has in recent years extended its lead over Japan’s and South Korea’s.
China made 60% of the world’s large vessels in 2024, up from 44% five years earlier, according to BRS Shipbrokers.
American ships can cost up to five times the amount of those built in Asia.
So far this year, China has made 717 large commercial vessels; the US just one, according to BRS.
The new rules are the most stringent for Chinese shipping companies, which cannot avoid the levies.
HSBC, an investment bank, estimated that Cosco, a large Chinese shipping line, could pay US$1.5 billion ($2.6b) in fees next year, which the bank said could reduce Codco’s operating earnings by nearly three-fourths in 2026.
Cosco did not respond to a request for comment, but in an April statement, the company said the US fees would “risk undermining the security, resilience, and orderly operation of global industrial and supply chains”.
Workers sand the side of a ship at a shipyard in Philadelphia, US. Photo / Kriston Jae Bethel, The New York Times
Matthew Funaiole, a vice-president at the Centre for Strategic and International Studies, noted that MSC, a Swiss shipping giant, placed orders for 12 large Chinese container vessels this year.
Shipping companies buying from China are “going to get a quality ship at a low cost in a quick turn time”, Funaiole said.
That, he added, might outweigh the costs and inconveniences created by the new penalties on Chinese vessels. MSC declined to comment.
The US penalties on Chinese ships are unlikely to prompt a rush of orders for American ships but they could work alongside other efforts aimed at revitalising American shipbuilding.
Those include bipartisan legislation in Congress that provides subsidies to the industry, though it is not clear when or if the bill will progress.
Some new money has recently flowed into American shipyards.
Hanwha, a conglomerate from South Korea with big shipbuilding operations in the country, last year bought a shipyard in Philadelphia for US$100 million.
Hanwha recently announced that its ship operating subsidiary had ordered 10 oil and chemical tankers from the Philadelphia plant, a big order for an American yard. It may not be indicative of broader market demand for American ships because one arm of Hanwha is buying from another.
Ryan Lynch, the chief executive of Hanwha Shipping, the entity ordering the vessels, defended the transaction, saying its economics were sound.
“We would never recommend to our board anything other than best practices,” he said.
Lynch declined to disclose how much Hanwha Shipping was paying for the vessels, saying only that it was a “market price”.
The Trump Administration’s shipping actions don’t target only Chinese ships. All foreign car-carrying vessels will be subject to fees, with narrow exceptions.
Auto companies lobbied against the car-carrier fees, saying they could add hundreds of dollars to the cost of a vehicle.
One way to avoid the fees is to buy an American made car carrier. Shipping analysts said it could take many years for the US shipbuilding industry to build such a vessel.
“The idea that these fees will lead to anyone ordering a US-built car carrier are, I think, extremely remote,” Grabow said.
The Administration is also targeting foreign-built ships that carry liquefied natural gas, a valuable American export, but it softened the actions against such vessels following pressure from the oil and gas industry.
The US Trade Representative, the agency formulating the new shipping rules, said last week that it had removed a provision that would have suspended licences to export LNG if a certain amount of the gas was not carried on American-made ships.
A spokesperson for the trade representative did not respond when asked how the LNG requirements would be enforced without the threat of suspending export licences.
