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 …
