On 24 February, the U.S. Trade Representative (USTR) issued a nearly 200-page investigation into China’s shipping dominance, proposing, among other suggestions, that the U.S. charge up to USD 1.5 million (EUR 1.43 million) for Chinese-built vessels and USD 500,000 (EUR 478,642) for vessels with Chinese-built ships among their fleet to enter the nation’s ports.
The proposed fee would respond to what the USTR says are unfair shipping practices carried out by China, according to Section 301 of the Trade Act of 1974.
As justification for the proposed fees, the report alleges that China has waged a three-decade campaign to dominate the global maritime, logistics, and shipbuilding industries and “has largely achieved its dominance goals, severely disadvantaging U.S. companies, workers, and the U.S. economy generally through lessened competition and commercial opportunities and through the creation of economic security risks from dependencies and vulnerabilities.”
Seafood sector importers, experts, and other stakeholders told SeafoodSource that they were concerned about the potential impacts of the fee, and that they are not sure how much more uncertainty their businesses can absorb.
A representative for the National Fisheries Institute told SeafoodSource that the proposal “raises numerous questions.”
“It would appear the shipper is the innocent bystander, but ultimately, the consumer is left with the bill as the cost of goods and services go up,” he said. “So, there’s only one clear conclusion: American consumers will pay the price. Meanwhile, it will make it more difficult to import and export goods; as an association that represents both, this is a concern.”
Supply chain and logistics expert Dr. Sunderesh Heragu, who serves as a professor at Oklamoha State Univesity and is the President-elect of the Institute of Industrial and Systems Engineers (IISE) told SeafoodSource that he shared these concerns, though he agreed that the U.S. needs to challenge Chinese shipping dominance.
“This didn’t happen overnight. China’s capacity was very small at the turn of the last century, and in 25 years, they’ve become a huge, dominant player. Given that that didn’t happen overnight, I think our reaction cannot just be based on fees. We need to have commensurate investment in infrastructure, incentives for domestic production – definitely for the seafood industry but I’m guessing also for everything else, too,” he said. “The U.S. is a net importer, however, [and] we should have a piece of the action when it comes to the logistics and not relegate that to other countries. I definitely see we need more ships.”
Part of Heragu’s concern about the plan has to do with the ability of individual businesses to absorb costs they hadn’t planned for.
“Can the system bear these sorts of changes and shocks?” he said. “There has to be some certainty in the system right now. There’s so much uncertainty with everything else that’s going on, [such as] the tariffs, the immigration policy, and our own alliances with some trading partners that have been very friendly with us for the last several decades. All that is a shock to the system, and adding one more element creates uncertainty. Businesses hate uncertainty, and that could backfire.”
Supreme Crab CEO Troy Turkin agreed with that assessment, saying “importers can not really handle further impacts to their business” right now.
"Truthfully, due to the 45 percent total tariff amount going into effect now, we will likely need to move a large portion of our buying away [from] China,” Turkin said. “It’s very sad and discouraging for the American consumer that a healthy protein like our red swimming crab is being forced out when this species doesn’t exist along our coastline nor is there enough domestically caught crab to satisfy the U.S. demand.”
Heragu further explained that even if U.S. shipbuilding could begin to compete with Chinese shipbuilders and even if the U.S. stopped importing so much seafood, none of these changes would happen overnight. For that reason, American consumers would see a “price increase” in the cost of their seafood if the fee moved forward, Heragu said.
One bright spot, according to Heragu, is that the U.S. already has massive shipbuilding infrastructure, which is primarily used to build Naval ships.
Heragu said a “multi-pronged solution,” which involved “working with our friends” and supporting the shipbuilding industry by cutting regulatory red tape and providing subsidies, while also potentially imposing fees on China, may help achieve the goals the USTR laid out without implementing a fee that could hurt U.S. businesses.
“I think we need the carrot and stick approach,” he said. “It cannot be just a stick; that can only work so long. China is a major player. They’ve got alliances all over the world.”
Stakeholders outside the seafood sector also weighed in on the proposed fee, expressing concern not about the proposal’s goals but about its strategy.
The World Shipping Council (WSC), a trade association representing container and vehicle carriers, released a statement saying it did not wish to take a position on whether China’s strategies have violated Section 301 but that it felt strongly “such a fee would be ineffective in addressing any problems found to exist and negatively affect U.S. importers, exporters, and consumers.”
The association said it feared that the proposed fees would raise prices for U.S. consumers, incentivize shippers to divert imports to Canada and Mexico, and, in effect, “create a new funding source for subsidies for U.S. shipbuilding without the required authorization by Congress.”
Ultimately, the WSC said, the fees would “act as a new tax on more than USD 750 billion [EUR 716 billion] worth of U.S. exports.”
Similarly, energy tanker brokerage firm Poten & Partners said in a recent newsletter that “in the highly competitive oil transportation market, a tanker that is subject to any of the proposed additional port fees will be instantly uncompetitive.”
The firm said that the outcome would be that “Chinese tanker operations will no longer call on U.S. ports.”
That would create a huge problem not only for the U.S. according to Jordan Dewart, president of shipping firm Redwood Mexico, who told FreightWaves that the plan could overwhelm Mexico’s ports and commercial railways, too.
“While the proposed fees directly target vessels entering U.S. ports, there could be indirect repercussions for ships calling on Mexico,” he said. “Shipping companies might reroute Chinese-built vessels to Mexican ports … to avoid these fees. This diversion could increase traffic and congestion in these ports, potentially straining their resources; Mexican West Coast ports just do not have the same infrastructure or efficiencies that U.S. ports do.”
Complicating the matter, National Retail Federation Chief Economist Jack Kleinhenz said in a 3 March release that the uncertainty around the Trump administration’s numerous new economic policies was limiting the ability of experts to predict the nation’s economic outlook.
“While the U.S. economy has entered 2025 with a fair amount of momentum, the mix of policies being debated on immigration, tariffs, deregulation, and taxes blur the economic outlook and its narrative, with many crosscurrents at work,” Kleinhenz said. “While deregulation and tax cuts could provide positive momentum, immigration restrictions and tariffs could be a drag on the economy and have adverse effects. Although recent economic data remains strong, we are concerned about the downside risks.”
Kleinhenz, like Heragu, was concerned that businesses and consumers would be slow to spend money when they experience uncertainty around regulations and policies.
“Weak consumer perceptions and uncertainty from the lack of clarity regarding future government policies and regulations can significantly hinder business operations,” he said. “That, in turn, can cause hesitation in consumer spending and make it difficult for companies to make investment and hiring decisions. We are watching carefully and hoping for the best as much depends on how and when these policies are put in place.”
