Under the new regulation, Chinese-owned cargo ships and third-country flagged ships constructed in China would be subject to a $1 million or higher fee at every port of call in the United States.
Leading from the front, the Trump administration is considering imposing a large dollar amount in taxes on Chinese cargo vessels, whether Chinese-designed or Chinese-made. This step is inviting a storm in the logistics industry around the world.
When shipping goods to the United States, large container ships sometimes make several stops and are subject to additional fees at each port.
The proposal, which was released Friday by the U.S. Trade Representative (USTR), is linked to an inquiry into claims made by several American labour organizations that China has unjustly distorted the global shipbuilding sector.
According to the findings of the investigation, which was carried out by Section 301 of the Trade Act of 1974, the Chinese government has subsidized its shipbuilding sector to “target for dominance” the international market.
Proliferating market share
China’s portion in the world’s shipbuilding industry has increased dramatically over the last 25 years, according to the investigation.
Approximately 5 per cent of all ships built in 1999 were built in China.
The Chinese market share exceeded 50% by 2023. Last month, the investigation’s findings –which started during President Joe Biden’s administration, were made public.
The administration will decide whether or not to execute the idea after it is put out for public comment until March 24.
Chinese Response (Tech News Updates in India)
Chinese Foreign Ministry spokesperson Lin Jian harshly denounced the U.S. action on Monday.
He said, “[T]o serve its political agenda at home, the U.S. has abused Section 301 investigation[s], which seriously violated WTO [World Trade Organization] rules and further undermined the multilateral trading system,” he said. “We call on the U.S. side to respect facts and multilateral rules and immediately stop its wrongdoings.”
The USTR inquiry was previously criticized by the China Shipowner Association and the China Association of the National Shipbuilding Industry (CANS) as having “conclusions full of lies and distortion of facts.”
When the investigation’s findings were made public, CANSI released a statement saying, “Development of China’s shipbuilding industry strictly follows the international trading rules and is the result of collaboration with global partners, as well as the tech innovation, and the hard-working and excellent performances of Chinese industry players.”
Turns And Twists In New Regulations (Tech News Updates in India)
Numerous intricate details in the USTR proposal make it difficult to determine exactly how any new port tax system would be implemented.
Although the proposal also seems to take into account a different price computation of $1000 per ton of capacity, which could add up to significantly more for huge ships that carry thousands of tons of cargo, each ship owned by a Chinese firm would be charged a $1 million fee upon entering a U.S. port.
A $1.5 million levy, which could be modified based on the proportion of Chinese-built ships in a shipowner’s fleet, would apply to Chinese-built ships managed by non-Chinese shipowners.
Even if the ship’s cargo wasn’t made in China, this would still be the case.
An additional $1 million levy per entrance at U.S. ports may be imposed on ships owned by businesses that have pending orders for new ships with Chinese shipbuilders.
Additionally, each time a shipping corporation transports a cargo ship built in the United States into a U.S. port, the rule stipulates a “refund” of a comparable amount.
Economic Explanations Are Unclear
Finding an economic rationale for the concept proved to be challenging, according to Mary Lovely, a senior scholar at the Peterson Institute for International Economics.
She confirmed, “The thing that’s disturbing is that it’s not linked to any particular policy that would benefit American businesses or consumers.”
The United States will continue to receive international trade, albeit via more complicated pathways that cost more money and take longer.
She observed, “It seems to me that this is just a tremendous way to reduce volume and employment at U.S. ports and force trade to take transportation routes and transportation modes that are clearly going to raise prices for U.S. businesses and consumers.”
She added. “There’s no way around it.”
Talking to media, Joe Kramek, who sits in the seat of president World Shipping Council and CEO, supported the idea, saying, “USTR’s proposed draconian $1 million-plus per U.S. port visit fees on ships that carry the large majority of the U.S. trade, if they are Chinese-built or –operated – or on any ship operator from any country that has even a single Chinese ship in its fleet or on order – if carried forward, would cause broad economic harm across all sectors of the U.S. supply chain.”
In an email to the media, he wrote, “The fees would result in fewer U.S. port calls, higher prices for U.S. consumers, and severe impacts for exporters, particularly American farmers.”
Not Likely to Help American Shipbuilders
According to Marc Levinson, an economist and historian based in Washington who has published two books about container shipping, the bill is unlikely to have a major effect on the U.S. shipbuilding sector, despite its apparent goal of assisting them.
Logistics Set-up Is the Backbone to India’s Economy
At the 12th Biennial International Conference on Ports, Shipping & Logistics 2025, which took place in Mumbai on Tuesday, Union Minister of Commerce & Industry Piyush Goyal emphasized the vital role that ports, shipping, and logistics play in India’s economic development.
As the Chief Guest, Goyal emphasized that these industries constitute the backbone of India’s economy, enabling commerce and linking the nation to international prospects, according to the Ministry of Commerce and Industry.
Goyal emphasized India’s enormous potential for shipbuilding and said the government is actively looking into ways to support the industry.
To make flagging of vessels in India an easy affair, he sought recommendations from the industry.
He said, “India has the advantage to allow cabotage of vessels and promote imports coming in Indian flagged vessels permitted within the WTO rules, but does not have enough flagged vessels to take advantage of the regulations.”
Goyal further counted the critical achievements being made in port infrastructure during the past decade as the ship capacity of the country has been doubled while ship turnaround time has also been choked.
Nevertheless, he still highlighted the need to revamp the logistics ecosystem amid global challenges and rising trade volumes.
Goyal highlighted the strategic value of India’s 7,500 km coastline, pointing out that 95% of its commerce volume goes through ports.
To effectively handle port traffic, he urged the industry to concentrate on enhancing logistical systems. Goyal promoted additional industry-led innovations to create a more integrated logistics framework, even if the Unified Logistics Interface (ULIF), which was implemented to streamline logistics operations, has been a positive step.
Hybrid Training Model: Tech news updates in India
Goyal vouched for such a training model in a bid to train the workforce to new challenges and also to cater to exclusive workforce demand.
He also pointed out important areas that needed to be improved, such as port congestion relief, faster export rates, container ownership, and container production.
Goyal positioned India as a ray of stability in the face of uncertainty surrounding international commerce by expressing faith in the country’s economic resilience.
He reaffirmed how important maritime commerce and logistics are to realize the goal of a “Viksit Bharat,” in which India’s shipping and logistics prowess propels sustained economic growth.
