As the U.S. begins imposing new tariffs on the global shipping market, many logistics industry stakeholders are still struggling to understand how the tariffs, and other related trade and maritime programs meant to boost U.S. industries – such as fees on “Chinese-owned” vessels or fleets – could affect their businesses.
Amid the confusion, a bipartisan group of U.S. lawmakers have teamed up to reintroduce the SHIPS for America Act, which aims to revitalize the U.S.shipbuilding and commercial maritime industries.
The proposed legislation would use any fees charged at American ports to support the rebuilding of the American maritime industry through the establishment of a Maritime Security Trust Fund.
“The Maritime Security Trust Fund would be financed by funds collected from Customs and Border Protection through duties, fees, and penalties imposed on vessels in international commerce, special tonnage taxes, light money, and penalties levied on foreign-built vessels related to the U.S. Trade Representative's Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors,” a summary of the Act shared by its bipartisan sponsors said.
The Act also said that it would impose a “new penalty on vessels which are owned or operated by a foreign entity of concern or registered to a foreign country of concern (defined as Russia, China, Iran, and North Korea), as well as vessel owners who conduct significant amounts of business with the CCP-owned China State Shipbuilding Corporation (CSSC).”
It’s not clear how or if those tonnage fees would replace the Trump administration’s proposed fees on Chinese vessels, but they would, it seems, impose some kind of new penalties on companies that brought large quantities into the country on Chinese vessels.
The Trump administration initially proposed a USD 1.5 million (EUR 1.3 million) charge for Chinese-built vessels and USD 500,000 (EUR 446,928) for vessels with Chinese-built ships in their fleets to enter American ports, though it later reversed course on the policy.
The proposal stirred confusion and fear in the logistics industry, where the lack of clarity about the policy’s roll out and uncertainty over what constituted a “Chinese-owned” vessel was provoking industry stakeholders to, Reed Smith Partner Leigh Hansson told SeafoodSource, “loo[k] for ways to map their risk now rather than wait for enforcement.”
Hansson, whose firm specializes in global regulatory enforcement, said that she had been fielding a large number of requests from clients about the issue and that “some are already considering restructuring options to minimize their exposure to potential tariffs tied to Chinese control.”
Hanssen and her colleagues have warned their clients that there could be far-reaching implications to the new policies.
“Shipowners need to assume a cautious approach – if there [is] any material Chinese control in a vessel’s structure, depending on what is introduced in May, it could trigger new tariffs,” she said. “Until regulators give clearer definitions, the industry is operating in a zone of uncertainty.”
When the administration first proposed the fee on Chinese vessels, supply chain and logistics expert Sunderesh Heragu, a Professor at Oklahoma State University and the President-elect of the Institute of Industrial and Systems Engineers (IISE), told SeafoodSource that while he agreed with the goal of bringing maritime manufacturing home, vessel fees and tariffs alone would not revitalize the shipbuilding industry.
He said that 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, might help achieve the goals the USTR laid out without implementing a fee that could unintentionally hurt U.S. businesses.
He also feared, he said, that the new fee structure would pass down unintended costs to U.S. businesses, which could lead to greater economic woes.
The good news, Heragu said, is that the U.S. already has a very significant shipbuilding infrastructure, which is primarily used to build Naval ships.
“I think we need the carrot and stick approach,” he said. “It cannot be just a stick; that can only work so long.”
Though the SHIPS for America Act appears poised to implement one such multipronged approach to the issue, the ramifications of the new trade policies are already being felt by logistics industry stakeholders.
One vocal and well-organized group, the West Coast dockworkers, represented by the International Longshore and Warehouse Union (ILWU), issued a 28 April statement critiquing the Trump administration’s approach as an “‘America First’ trade policy in name only,” and condemned the new tariffs.
The ILWU cited “massive” projected job losses and higher costs that trickled down to the working class as their key complaints.
“The reality is clear: these tariffs don’t put ‘America First’ – they put American working people last,” the statement read. “They will kill jobs, raise costs, and fuel economic instability that will ripple through every community in this country.”
