USTR Proposes Actions Pursuant to Section 301 Investigation Against Chinese-Built Ships

The United States is no longer the global power in shipbuilding that it once was,[1] but under the Trump Administration, this may change, and for the better, at least perhaps as far as U.S. shipbuilding is concerned.

In the 1970s, U.S. shipyards were building about 5% of the world’s shipping tonnage, or about two dozen new ships a year, but by 2023, U.S. shipyards accounted for only about 0.1% of the world’s tonnage.[2] The People’s Republic of China now dominates the shipbuilding industry, accounting for more than half of world tonnage in 2023 and 74% of newbuild ship orders last year.[3] In 1999, China accounted for 5% of the shipbuilding market, far behind Japan and Korea with 42% and 34%, respectively, but by 2023, China accounted for 59% of the market, more than Japan and Korea combined.[4]

On February 21, 2025, the Office of the United States Trade Representative (the “USTR”) announced its proposed actions[5] in response to its January 2025 determination pursuant to Sections 301(b) and 304(a) of the U.S. Trade Act of 1974, as amended (the “Trade Act” or the “Act”) and codified at 19 U.S.C. §§ 2411(b) and 2414(a), that the targeting of the maritime, logistics and shipbuilding sectors for dominance by China is unreasonable and burdens or restricts U.S. commerce, and thus is actionable under Section 301(b) of the Act.[6]

The USTR’s proposed actions include the following:

1. Fees in the amount of up to US$1,000 per net ton or US$1,000,000 on Chinese-operated vessels entering U.S. ports, and up to US$1,500,000 or an amount based on the percentage of Chinese-built vessels in the operator’s fleet for Chinese-built vessels entering U.S. ports, plus an additional fee on each vessel entering a U.S. port and operated by a maritime transport operator with one or more vessels on order from or to be delivered by Chinese shipyards regardless of the operator’s nationality or the country in which the vessel entering the U.S. port was built;[7]
2. Requirements that the international maritime transport of a percentage of U.S. goods exported by vessel each calendar year be restricted to export on U.S.-flagged vessels by U.S. operators starting at 1% and increasing to 15% after seven years, with a certain percentage of those goods to be exported on vessels that are U.S.-flagged, U.S.-operated and U.S.-built after three years;[8]
3. Actions to reduce exposure to and risks from China’s promotion of the National Transportation and Logistics Public Information Platform (LOGINK)[9] or other similar platforms;[10] and
4. Entering into negotiations with allies and partners in order to counteract China’s acts, policies and practices and to reduce dependencies on China in the maritime, logistics and shipbuilding sectors.[11]

These proposed actions may negatively affect shipowners and U.S. importers and exporters and are likely to cause higher shipping costs and supply chain disruptions.

USTR’s Investigation of China’s Maritime, Logistics and Shipbuilding Sectors

On March 12, 2024, five labor unions filed a petition with the USTR under Section 301(a)(1) of the Trade Act requesting an investigation into the acts, policies and practices of China in the maritime, logistics and shipbuilding sectors.[12] Section 301 of the Trade Act allows the USTR to address unreasonable or discriminatory acts, policies or practices that burden or restrict U.S. commerce.[13] On April 17, 2024, the USTR initiated the investigation[14] and released a report with its determinations and findings on January 16, 2025, concluding that China has been targeting the maritime, logistics and shipbuilding sectors for dominance through state-led, top-down, non-economic industrial planning[15] and that this targeting is unreasonable because

1. it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition;
2. it creates dependencies on China, increasing risk and reducing supply chain resilience; and
3. of China’s extraordinary control over its economic actors and these sectors.[16]

The USTR also identified that China’s targeting dominance burdens or restricts U.S. commerce by

1. undercutting business opportunities for and investments in the U.S. maritime, logistics and shipbuilding sectors;
2. restricting competition and choice;
3. creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and
4. undermining supply chain resilience.[17]

The results of this investigation provided a basis for finding that responsive action is appropriate leading to the USTR’s proposed actions.

USTR’s Proposed Actions

Section 301 of the Trade Act authorizes the USTR to take certain actions against any goods or economic sector on a non-discriminatory basis or solely against the foreign country concerned.

If the USTR determines under Section 304(a)(1) of the Trade Act[18] that an act, policy or practice of a foreign country is unreasonable or discriminatory and burdens or restricts U.S. commerce, and action by the United States is appropriate, the USTR shall take all appropriate and feasible action authorized under Section 304(c) of the Act, subject to the specific direction, if any, of the President of the United States regarding any such action, and all other appropriate and feasible action within the power of the President that the President may direct the USTR to take under Section 304(c), to obtain the elimination of that act, policy or practice.[19] Section 304(c) of the Act provides that the USTR’s actions may include, among others and notwithstanding any other provision of law, imposing fees or restrictions on the services of such foreign country for such time as the USTR determines appropriate.[20]

The USTR is proposing four actions to address China’s unreasonable, burdensome and restrictive actions: (A) imposing fees on services at U.S. ports; (B) restricting services to promote the export of U.S. goods on U.S.-flagged, -operated and -built vessels; (C) restricting access to U.S. shipping data on LOGINK; and (D) entering into negotiations with allies and partners to counter China’s policies and reduce reliance on Chinese-dominated maritime sectors.

1. Service Fees

   Chinese maritime transport operators are to be charged a fee on the international maritime transport being provided (a) at a rate of up to US$1,000,000 per entrance of any vessel of that operator to a U.S. port; or (b) per entrance of any vessel of that operator to a U.S. port, at a rate of up to US$1,000 per net ton of the vessel’s capacity.[21]

   Maritime transport operators with fleets comprised of Chinese-built vessels are to be charged (a) a fee upon the entrance of a Chinese-built vessel to a U.S. port at a rate of up to US$1,500,000; (b) based on the percentage of Chinese-built vessels in that operator’s fleet, a fee of between US$500,000 and US$1,000,000 per vessel entrance to a U.S. port;[22] or (c) based on the percentage of Chinese-built vessels in an operator’s fleet, an additional fee of up to US$1,000,000 if the number of Chinese-built vessels in the operator’s fleet is equal to or greater than 25%.[23]

   Maritime transport operators with prospective orders for Chinese vessels are to be charged an additional fee based on the percentage of vessels ordered from Chinese shipyards: (a) for operators with vessel orders in Chinese shipyards or expected to be delivered over the next 24 months, a fee between US$500,000 and US$1,000,000 per vessel entrance into a U.S. port;[24] or (b) a fee of up to US$1,000,000 per vessel entrance to a U.S. port will be charged to a vessel operator if 25% or more of the total number of vessels ordered by that operator, or expected to be delivered to that operator, are ordered or expected to be delivered by Chinese shipyards over the next 24 months.[25]

   The USTR provided that additional fees on the maritime transport services charged to an operator addressed above may be refunded, on a calendar year basis, in an amount up to US$1,000,000 per entry into a U.S. port of a U.S.-built vessel through which the operator is providing international maritime transport services.[26]

2. Restrictions on Services to Promote the Transport of U.S. Goods on U.S. Vessels

   The USTR is proposing a seven-year schedule that restricts the international maritime transport of all exported U.S. goods, such as capital goods, consumer goods, agricultural products and chemical, petroleum or gas products, to export on U.S.-flagged, U.S.-built vessels by U.S. operators.[27] The schedule is as follows:

   1. Effective as of the date on which the proposal is approved (the “date of action”), the international maritime transport of at least 1% of U.S. products, per calendar year, that is exported by vessel, is restricted to export on U.S.-flagged vessels by U.S. operators.
   2. Effective as of two years following the date of action, the international maritime transport of at least 3% of U.S. products, per calendar year, that is exported by vessel, is restricted to export on U.S.-flagged vessels by U.S. operators.
   3. Effective as of three years following the date of action, the international maritime transport of at least 5% of U.S. goods, per calendar year, that is exported by vessel, is restricted to export on U.S.-flagged vessels by U.S. operators, of which 3% must be U.S.-flagged, U.S.-built vessels, by U.S. operators.
   4. Effective as of seven years following the date of action, the international maritime transport of at least 15% of U.S. goods, per calendar year, is restricted to export on U.S.-flagged vessels by U.S. operators, of which 5% must be U.S.-flagged, U.S.-built vessels, by U.S. operators.[28]

   Additionally, the proposed action states that the export of U.S. goods by international maritime transport must be on U.S.-flagged, U.S.-built vessels, but may be approved for export on a non-U.S.-built vessel provided the operator providing international maritime transport services demonstrates that at least 20% of U.S. products, per calendar year, that the operator will transport by vessel, will be transported on U.S.-flagged, U.S.-built ships.[29]

3. Other Actions by the USTR

In addition to the proposed service fees and restriction on services, the USTR is proposing actions to reduce exposure to and risks from China’s promotion of LOGINK or other similar platforms, such as recommending that relevant U.S. agencies investigate alleged anticompetitive practices from Chinese shipping companies, restricting LOGINK access to U.S. shipping data or banning or continuing to ban terminals at U.S. ports and U.S. ports from using LOGINK software.[30]

The USTR also may consider entering into negotiations with allies and partners to counteract China’s acts, policies and practices and to reduce dependencies on China in the maritime, logistics and shipbuilding sectors.[31]

Other Action by the Trump Administration

On April 9, 2025, President Trump signed an Executive Order entitled “Restoring America’s Maritime Dominance.” The Executive Order directs, among other actions, the USTR to coordinate with the U.S. Department of Justice and Secretary of Homeland Security on the enforcement of any action USTR may take as a result of its proposals in response to its finding that China has been targeting the maritime, logistics and shipbuilding sectors for dominance,[32] but does not go as far as an earlier draft Executive Order entitled “Make Shipbuilding Great Again.” That draft had suggested that the Trump Administration was prepared to take a tougher stance on U.S. port fees than has been proposed by the USTR.[33]

Like the USTR’s proposal, the draft Executive Order to Make Shipbuilding Great Again would have imposed tonnage-based fees on Chinese-built vessels that dock in the United States, and fees on any vessel that enters a U.S. port, regardless of where the vessel was built or flagged, if the vessel is part of a fleet that includes vessels built in China.[34] Unlike the USTR’s proposal, the draft Executive Order did not indicate how the fees would be calculated or whether they would be the same as, different from or in addition to those already proposed by the USTR.[35] The draft Executive Order would have also directed U.S. officials to engage U.S. allies and partners, and other countries to impose similar measures or risk retaliation from the United States.[36]

The Executive Order for Restoring America’s Maritime Dominance signed by President Trump on April 9, 2025, contains many of the same directives contained in the earlier draft Executive Order to Make Shipbuilding Great Again, but unlike as was proposed in the earlier draft Executive Order and is still proposed by USTR in its proposed action, does not impose new U.S. port fees on Chinese-built or -operated vessels or vessels in fleets that include Chinese-built vessels, and unlike as is proposed in the USTR’s proposed action, sets no requirement that a percentage of U.S. goods exported by vessel be exported on U.S.-flagged, -operated and -built ships.[37] The absence of specific requirements for U.S. port fees on Chinese-built and -operated vessels and for a percentage of U.S. goods to be exported by vessel to be exported on U.S.-flagged, -operated and -built vessels may be in deference to the USTR’s ongoing consideration of these proposed actions pursuant to Section 301 of the Trade Act[38] or the result of industry reaction to the USTR’s proposed action. The Trump Administration may impose U.S. port fees on Chinese-built and -operated vessels, but for the time being, appears inclined to do so through the USTR’s proposed action pursuant to the Trade Act.

Industry Reaction to the USTR’s Proposed Action

As of April 10, 2025, the USTR had received more than 580 written comments regarding its proposed actions.[39] Many of the comments express concern. The World Shipping Council, a trade organization representing most of the world’s largest liner container shipping companies, noted that the proposals “would cause significant harm to U.S. consumers and exporters” by increasing the cost of everything from consumer goods to inputs used for production of items in the United States, and increasing the cost of exporting goods that U.S. producers hope to sell in foreign markets[40] while also noting that the proposed U.S. port fees and U.S.-flag./U.S.-built export requirements “are not plausibly designed to secure the elimination of the acts, policies, and practices”[41] used by China to dominate maritime, logistics and shipbuilding. Other trade organizations have expressed similar concerns.[42]

Support for the USTR’s proposed actions in the written comments submitted to the USTR portal has been limited. Riley Ohlson, Legislative Representative for the AFL-CIO, noted that “[f]ees on operators utilizing ships built in China, export requirements that boost demand for U.S.-flagged and built vessels, and efforts to boost multilateral engagement to push back on China’s distortive and predatory practices have the potential to level the playing field and strengthen [America’s] domestic maritime sector, shipbuilding base and the upstream supply chains that support them.”[43] Ohlson also noted that it is critical that the fees included in the USTR’s remedies “lead to investments in [America’s] shipbuilding and maritime industrial base and related supply chains, new demand for U.S.-built and -flagged vessels and good jobs for American workers [and be coupled with] actions to limit trade diversion and [tailored] to avoid adverse impacts in the near term on the exports of certain raw materials.”[44] Ryan Lynch, writing on behalf of Hanwha Shipping, a U.S. shipowner with affiliated shipbuilding companies in the United States and Korea, expressed strong support of the efforts to counterbalance China’s acts, policies and practices in the targeting of the marine, logistics and shipbuilding sectors for dominance and noted that the USTR’s proposed actions would facilitate the entry of its vessels into the service of the United States, providing a clear pathway to help support the establishment of U.S. maritime capabilities.[45]

Analysis and Key Takeaways

While some have suggested that the USTR’s proposed action is nothing more than a bargaining chip in a much larger geopolitical negotiation between the United States and China, any outright dismissal of the USTR’s proposed action on the assumption that the Trump Administration will bargain them away in the first round of any discussions between two of the world’s largest economies is likely ill-advised. The Trump Administration and many on Capitol Hill appear to be serious about rebuilding America’s merchant marine and military sealift capabilities, as evidenced by the introduction of the proposed SHIPS for America Act in December 2024, and one attractive source of financing for rebuilding is fees on the operators of Chinese-linked vessels calling on U.S. ports. Nevertheless, the proposed action seems unlikely to work in the time frame proposed.

While the USTR’s proposed action contains numerous ambiguities, some version of the proposed action may be possible, with significant implications for shipowners. To avoid the proposed U.S. port-entry fees, vessel operators may limit or eliminate visiting U.S. ports or redirect shipments to ports in Mexico and Canada to avoid potential fees through transshipment to the United States, although this avenue may be limited.[46] Any significant reduction in U.S. port calls will likely trigger supply chain disruptions resulting in increased costs being shouldered by consumers and retailers. In addition, “[o]ne obvious implication is that [ship]owners may soon have to think about their current orderbook and operating fleet. Another is how those non-compliant or looking to remain compliant, will even do so as their fleets age and shipyard capacity dwindles (while also pushing newbuild prices higher).”[47]

If approved, the USTR proposals may compel shipowners with ships calling on the United States to avoid fees by avoiding U.S. port calls or realigning their fleets, either to focus on U.S. markets by selling Chinese-built vessels or companies that own Chinese-built vessels, or to focus on non-U.S. markets while buying up Chinese-built tonnage or companies that own Chinese-built tonnage at reduced prices. The first signs of this realignment may already be apparent. On March 24, 2025, a New York Stock Exchange-listed shipowner was reported to be selling its only two Chinese-built Very Large Crude Carriers (VLCCs) in a move some have suggested may be linked to the USTR’s proposed U.S. port fees on Chinese-built vessels.[48] Other shipowners have chosen to work with the current Administration. CMA CGM, the leading Marseille, France-based shipping and logistics company and operator of U.S.-flagged carrier American President Lines, announced a US$20 billion investment in the United States for port infrastructure development, capacity growth in U.S. logistics, and a tripling of CMA CGM’s U.S. fleet from 10 to 30 ships over the next four years.[49]

The ambiguities of the USTR’s proposals have also raised concerns with the owners and operators of vessels subject to Chinese leases. Many vessels, including vessels not built in China, have been financed under lease arrangements by which Chinese banks and leasing companies have purchased the vessels and chartered them to non-Chinese demise owners under bareboat charters, which are often described as giving the demise owners ownership of the vessels in all respects except title. Are references to “Chinese operators” in the USTR’s proposed actions also meant to apply to financial owners like the Chinese banks and leasing companies under these arrangements?

The USTR’s ruling on its proposed actions may be issued as soon as later this month.

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