The USTR Notice of Action issued on April 17 introducing fees up to $1.5 million on Chinese shipping companies and Chinese-built vessels has sparked industry-wide concerns about its potential impacts. While the fees are set to take effect 180 days from the announcement (on October 14), could still be amended following a public hearing scheduled by USTR on May 19.
At first glance, the 180-day implementation buffer might seem procedural, but it could also embody a tactical move, in line with President Trump’s negotiation methods: creating leverage through the credible threat of future action, while leaving space for reactions, renegotiations, or policy adjustments. Trump has deployed similar unpredictability and aggressive rhetoric in the past (NAFTA renegotiations and replacement by USMCA, war threats to North Korea, talks with EU etc.) to shift the balance in US favor. This tactic reflects a modern adaptation of the “Madman Theory” strategy used by Nixon during the Cold War and the Vietnam War; projecting unpredictability and willingness to take extreme and seemingly irrational actions to unsettle adversaries. In this context, the 180- day window may serve both as a timeline for potential enforcement and as an invitation for further negotiations.
Whether the fees will ultimately be implemented in full or adjusted as part of negotiations remains uncertain, the use of unpredictability as negotiation tool is consistent with Trump’s strategical behavior. Whether it results in tangible benefits for the U.S. is yet to be determined.
Focusing to Shipping, an assessment across major shipping segments reveals varying degrees of potential impact:
The dry bulk sector appears relatively less impacted due to two factors. (i) US imports of dry bulk commodities are only a small share of global dry bulk imports and (ii) Vessels with bulk capacity under 80,000 dwt, a significant share of dry bulk carriers calling US ports, are exempt from the fees. Additionally, US dry bulk exports will remain undisrupted, as vessels arriving in ballast to load cargo are exempted.
Regarding tankers, due to the multiple exemptions (vessels under 55,000 dwt, chemical tankers, short sea routes etc), the small share of USA in crude and product imports and small volume of tanker voyages to US ports (as of full 2024), less than 5% of the voyages would face fees. Consequently, limited impact on crude and product tanker trade flows is estimated.
LNG carriers are exempt from fees. However, from 2028 onwards, a new requirement is introduced, i.e. 1% of exported LNG to be carried by US-built, flagged and operated vessels, increasing gradually to 15% by 2047. The feasibility of this requirement is questionable, given the current shortage of US LNG vessels and timeframes linked to construction of new units.
The containership sector could face more pronounced impacts. Larger vessels (above 4,000 TEU) will be subject to fees, potentially shifting demand toward smaller ships. As immediate market response, a decline of bookings in China-US routes has been observed, and an increase in blank sailings, with owners and charterers adopting a cautious stance and reassessing options. Other effects include a potential uptick in frontloads as the implementation date approaches, trade reshuffling with Chinese ships avoiding US trades and expansion of regional hub-and-spoke models, where cargo is transshipped through Caribbean or Latin American ports onto smaller feeder vessels, allowing operators to bypass the new fees.
Finally, all foreign-built vehicle carriers will be subject to fees, but operators may achieve a three-year fee remission if they order a vessel of equal or greater capacity at a U.S. shipyard. Given that the US was the world’s largest seaborne car importer in 2024, with a share of approximately 19% of global car imports, the impact here is likely to be significant. Although the policy aims to stimulate US shipbuilding, challenges loom: the global PCC sector is currently oversupplied with a heavy orderbook (following market’s surge due to the rapid growth of EVs production and sales), and a slowdown in seaborne vehicle trade may discourage newbuild orders despite the incentives offered.
In conclusion, the USTR's proposed fees will impact various shipping sectors, with effects differing in extent. While the 180-day window and the hearing of 19 May allow for potential adjustments and negotiations, the final outcome remains to be determined. As these policies may be amended before the final implementation date, market participants will need to closely monitor the developments to grasp the full impact.
Data Source: Intermodal