U.S. concerns surrounding the proliferation of the Chinese shipbuilding industry pre-date the current tariff wars.  Under the previous Biden administration, on March 12, 2024, various U.S. labor unions filed a petition requesting an investigation into the acts, policies, and practices of China targeting the maritime, logistics, and shipbuilding sectors for dominance.

Following a year-long investigation, including input from industry and a public consultation, the United States Trade Representative (“USTR”) determined that China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable and burdens or restricts U.S. commerce and is therefore actionable under Sections 301(b) and 304(a) of the Trade Act.

Consequently, on April 17 2025, the USTR published its updated proposed actions on the imposition of additional U.S. port service fees for vessels with a Chinese-nexus.  This is subject to a further round of consultation, such that a finalised set of measures is likely to be published at the end of May 2025, but currently the measures look set to extend to owners that have vessels in a Chinese leasing structure (e.g. where lessor is an SPV owned by a Chinese financial institution and bareboat-chartered to the operator). 

While tame as compared to the original set of measures proposed in February, this modified version still has significant implications for market players that conduct their U.S. trade with the following nexus:

• Chinese vessel operators and vessel owners (“Annex I”)
• Chinese-built vessels (“Annex II”)

Annex I

Under the current USTR proposal, the Annex I measures, based on the net tonnage of the vessel, are assessed against any vessel with a Chinese operator or owned by a Chinese entity.  If a vessel makes multiple U.S. entries before transiting to a foreign destination, this fee is assessed per rotation or string of U.S. port calls.  There is a grace period until October 14, 2025, after which time the fee will be set at $50/NT, to increase incrementally over the next three years.

The term “vessel operator” means the entity that is identified as the operator of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (CBP Form 1300).  Similarly, “vessel owner” means the entity that is identified as the owner of the vessel and whose name would appear on the CBP Form 1300 / its electronic equivalent.

In triggering the additional U.S. port service fees, an owner is deemed a “vessel owner of China” if it meets any of the following criteria:

1. whose country of citizenship is identified as the People’s Republic of China (PRC), Hong Kong, or Macau on the Vessel Entrance or Clearance Statement or its electronic equivalent;

2. whose headquarters, parent entity’s headquarters, or parent entity’s principal place of business is the PRC, Hong Kong, or Macau;

3. is owned by, or controlled by, a citizen or citizens of the PRC, Hong Kong, or Macau;

4. is owned by, controlled by, or subject to the jurisdiction or direction of the PRC, Hong Kong, or Macau. An entity is owned by, controlled by, or subject to the jurisdiction or direction of the PRC, Hong Kong, or Macau where:

1. the entity is a national or resident of the PRC, Hong Kong, or Macau;
2. the entity is organized under the laws of or has its principal place of business in the PRC, Hong Kong, or Macau;
3. 25 percent or more of the entity’s outstanding voting interest, board seats, or equity interest is held directly or indirectly by any combination of the governments of the PRC, Hong Kong, or Macau;
4. 25 percent or more of the entity’s outstanding voting interest, board seats, or equity interest is held directly or indirectly by any combination of the persons who fall within (A)-(C) above.

5. is owned by, or controlled by, an entity listed as a Chinese Military Company pursuant to Section 1260H of the William M. (“Mac”) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Pub. L. 116-283); or

6. is an ocean common carrier, as defined in 46 U.S.C. 40102(7), that is, or whose operating assets are, directly or indirectly, owned or controlled by the government of the PRC or any of its political subdivisions, with ownership or control by a government being deemed to exist for a carrier if:

1. a majority of the interest in the carrier is owned or controlled in any manner by the government of the PRC, an agency of the government of the PRC, or a public or private person controlled by the government of the PRC; or
2. the government of the PRC or any of its political subdivisions has the right to appoint or disapprove the appointment of a majority of the directors, the chief operating officer, or the chief executive officer of the carrier.

It is particularly noteworthy that the triggering circumstances go beyond just shareholding ownership and also extends to various means of “control.”  This is likely to have implications for vessels that are financed by Chinese entities that may retain economic and beneficial ownership through Hong Kong-based SPVs or otherwise be in a position to exercise operational control over the vessel. 

A “vessel operator of China” similarly means any entity that is a vessel operator that meets one or more of the conditions of subparagraphs above ((1)-(6)).

Under a scenario where a vessel is captured by an Annex I-type China nexus (based on ownership / operatorship), on or before the entry of a vessel at the first U.S. port or place from outside the Customs territory on a particular string, the vessel operator must pay:

Effective as of October 14, 2025, a fee in the amount of $50 per net ton for the arriving vessel.

Effective as of April 17, 2026, a fee in the amount of $80 per net ton for the arriving vessel.

Effective as of April 17, 2027, a fee in the amount of $110 per net ton for the arriving vessel.

Effective as of April 17, 2028, a fee in the amount of $140 per net ton for the arriving vessel.

The fee will be charged up to five times per year, per vessel.

Annex II

Distinct from Annex I, the Annex II fees are triggered when the calling vessel is Chinese-built, which is defined as “a vessel that was built in the People’s Republic of China, consistent with the definition of place of build in CBP and U.S. Coast Guard (USCG) regulations and would be so identified on the Vessel Entrance or Clearance Statement (CBP Form 1300) or its electronic equivalent.”

Subject to the coverage and special rules of Annex II, upon the arrival of a Chinese-built vessel to a U.S. port or point from outside the Customs territory on a particular string, a vessel operator that is not a vessel operator of China is to pay the higher of these two fee calculation methods:

Effective as of October 14, 2025, a fee in the amount of $18 per net ton for the arriving vessel.

Effective as of April 17, 2026, a fee in the amount of $23 per net ton for the arriving vessel.

Effective as of April 17, 2027, a fee in the amount of $28 per net ton for the arriving vessel.

Effective as of April 17, 2028, a fee in the amount of $33 per net ton for the arriving vessel.

OR

Effective as of October 14, 2025, a fee in the amount of $120 for each container discharged.

Effective as of April 17, 2026, a fee in the amount of $153 for each container discharged.

Effective as of April 17, 2027, a fee in the amount of $195 for each container discharged.

Effective as of April 17, 2028, a fee in the amount of $250 for each container discharged.

Once again, the fee will be charged up to five times per year, per vessel, and to be applied per U.S. voyage “string” (not at each U.S. port call).  Separate from the Annex I, however, there are numerous exemptions available for Annex II.  Specifically, the following scenarios are exempt from the scope of Annex II and the fees imposed in this Annex do not apply to the following Chinese-built vessels:

1. U.S.-owned or U.S.-flagged vessels enrolled in the Voluntary Intermodal Sealift Agreement, the Maritime Security Program, the Tanker Security Program, or the Cable Security Program;
2. vessels arriving empty or in ballast;
3. vessels with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons;
4. vessels entering a U.S. port in the continental United States from a voyage of less than 2,000 nautical miles from a foreign port or point
5. U.S.-owned vessels, where the U.S. entity owning the vessel is controlled by U.S. persons and is at least 75 percent beneficially owned by U.S. persons;
6. specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms; and
7. vessels principally identified as “Lakers Vessels” on CBP Form 1300, or its electronic equivalent.

Conclusion

The proposed fees are not cumulative or stacked.  At the same time, exemptions of Annex II cannot be used to negate the triggering circumstances under Annex I.  The comment period has re-opened for industry participants and another public hearing will be held on these revised measures on May 19, 2025 – after which date we expect the USTR to fine tune the measures into their final implementation shape.