by Lloyd's List

10 April 2025 (Lloyd's List) - THE US Trade Representative port fee plan targeting Chinese-built ships is intertwined with America’s goal of revitalising its shipbuilding industry. President Donald Trump signed an executive order on US shipbuilding on Wednesday, and something was glaringly absent: the language on port fees.

The draft of this EO was leaked to the press in early March, prior to the USTR hearings on port fees.

The draft EO specifically called for “tonnage-based fees on PRC-built or flagged vessels that dock in US ports” and “fees on any vessel that enters a US port, regardless of where it was built or flagged, if that vessel is part of a fleet that includes vessels built or flagged in the PRC”.

That language was not in the final version of the EO signed on Wednesday, which merely directs the USTR to coordinate with other government agencies to enact “the actions, if any, that the USTR determines to take”.

Chamber of Shipping of America president Kathy Metcalf was asked about the missing language during an online webinar organised by the International Chamber of Shipping on Thursday.

“It tells me that somebody in the White House was listening to the hearings,” she responded. “It’s positive that this has dropped out and it was turned into more generic language. It could still be as bad as it could have been, but I sense some of the pressure [on the administration] and I see a softening.”

According to Nicholas Tabori, director of US regulatory affairs at the World Shipping Council, “The EO specifically does not require the USTR to take any remedies, while the draft EO did. So, they are pushing this to the good hands of the USTR to do its job.

“If you listened to the testimony of Ambassador Greer [USTR head Jamieson Greer] at two different congressional hearings this week, it sounded like the USTR does understand the pain that could be inflicted on the US economy by some of the more draconian measures,” said Tabori.

“It sounded like the USTR took the good advice of the panellists at the hearings to heart. And I would venture to say that we could see the USTR make some more rational decisions.”

Fee plan review follows traditional course

The business and financial communities have been alarmed by Trump’s unilateral behavior on tariffs and his seeming disregard for fallout. The fear, particularly after the draft EO leaked, was that he’d follow the same top-down, consequences-be-damned pattern with US port fees.

That hasn’t happened. The port fee proposal has followed the normal administrative process, allowing for industry feedback and following a scheduled timetable, as was the case with tariffs during Trump 1.0.

Hearings were held on March 24 and March 26, featuring 70 panellists. Over 500 written submissions were filed. Virtually all of the feedback was negative.

According to Rachel Noronha, head of shipping policy at the ICS, participants at the hearings also included administration representatives from the departments of transportation, agriculture, energy and commerce, as well as from the Small Business Administration and other agencies. Administration officials not only asked pointed questions, but followed up with industry groups after the hearings with more questions.

“It seemed quite clear that the USTR and some of the other government representatives on the interagency panel hadn’t realised the extent of the impact these proposals could have, particularly on agricultural and energy commodities,” Noronha said.

“It seems as though the US is now considering a potentially softened version of the proposed fees and potentially some delayed implementation as well,” she added.

Metcalf said, “Clearly, they did not realise the impact of what they were proposing and the hearing, quite frankly, got their attention. I don’t know what that means for the state of play with this particular White House or how they will move forward, but clearly, they received the message that there would be a significant impact, not only on trade but on the US consumer. Politically, the consumers have more impact than trade, because trade doesn’t vote. US consumers do.”

Next step: Feedback during implementation phase

Shipping groups have urged the USTR to only charge fees on newbuildings ordered in China after a proposed cutoff date.

If fees are charged to operators of existing Chinese-built ships, businesses have requested that the USTR modify fees based on ship size or cargo value, and exclude highly vulnerable short-sea markets like the Caribbean. US exporters urged the USTR to rethink the timeline for cargo preference on US-flagged and US-built ships.

The shipping industry will know the USTR’s decision shortly.

The determination will be published on or before April 17, a deadline confirmed by Greer in a congressional hearing earlier this week. That will be followed by an implementation phase, with a hearing on implementation in mid-May. The fees would begin to be charged within 180 days of the determination, i.e., by mid-November.

Metcalf expects that the determination released by the USTR next week will “be more conceptual than how do they do the nuts and bolts of what they’re going to do”.

A watered-down version due to heavy lobbying would certainly be welcomed by the shipping industry, but the devil is in the details and poorly written implementation rules could still do considerable damage.

Key unanswered questions for the implementation phase include: What is the definition of an “operator”? What is considered “Chinese-built” if only a portion of the work was done in China? How will fees be collected at the ports? How will the US government determine the percentages of fleets that are Chinese-built or on order in China, and who will provide those percentages — which will be constantly in flux?

Regarding the operator definition, Metcalf said, “This is absolutely the same discussion we’re having at the IMO with greenhouse gas levies: Who is going to pay it? I think that the US government is going to see this as a commercial matter. So long as it’s paid, they don’t care whose cheque it is. I think we’re going to need to take this up as a commercial matter between charterers, vessel owners and ship management firms and iron this out if they don’t clarify it further.

“What I would tell everyone with an interest in this issue is that there’s going to be another step,” Metcalf said, referring to the implementation hearing. “When we get to that stage, I urge everyone to provide comments, because these people — no disrespect intended — don’t know a lot about the commercial nature of shipping.”

According to Tabori, “Things will change. We will be in a position of flux for quite a while. Whether it’s tariffs of this particular remedy [port fees], they are meant to change the way the world does business. That’s their purpose. You can’t have that purpose and not see change. So, we all have to be ready for change, and it will affect all of us differently."

"Hopefully, we can lend our assistance and get somewhere that ends up being a good place that everybody can live with.”