The Trump administration rolled out new fees to revive American shipbuilding and challenge China’s dominance — but experts warn it was an unrealistic gambit that could spark economic chaos.
The plan, announced late Thursday by the US Trade Representative, slaps steep levies on Chinese ships docking at US ports based on the amount of cargo they are carrying – which could soar to as much as $50 million per vessel, per year.
The new tax doesn’t kick in until October – presumably giving President Trump another arrow in his quiver in the escalating trade war with China, whose vessels will soon carry 98% of all global shipping.
“The whole intent is to try to shut out the Chinese boats and encourage [manufacturers in the] US to start building ships, but that’s going to take a long time,” Dr. Sung Won Sohn, a former commissioner of the Port of Los Angeles, told The Post on Friday.
In February, the Trump administration floated a plan that would impose a flat service fee on China-built ships of up to $1.5 million per port call.
The revised plan will now charge ship operators per voyage, instead per port of call, with China-owned vessels flagged by other nations paying less than Chinese shipping companies such as COSCO.
Chinese Foreign Ministry spokesperson Lin Jian strongly criticized the measures, asserting at a Friday press briefing in Beijing that these new levies would ultimately “hurt the US itself as well as others.”
The World Shipping Council, a Washington, DC-based trade group, called the port fees “a step in the wrong direction.”
Beginning Oct. 14, Chinese-built and owned ships will be charged $50 a net ton, a rate that will increase by $30 a year over the next three years.
Chinese-built ships owned by non-Chinese firms will be charged $18 a net ton, with annual fee increases of $5 over the same period.
Ocean carriers that provide proof of ordering a US-built vessel will have the tax suspended for up to three years.
It was not immediately clear how high the maximum fees would run for large container vessels, which can carry up to 220,000 tons of cargo.
But if the $50-a-ton rate is applied to a vessel carrying 200,000 tons of cargo, that would amount to $10 million per voyage.
The fee would be applied up to five times per year, per vessel, putting an onerous $50 million tax on Chinese operators.
“Ships and shipping are vital to American economic security and the free flow of commerce,” said US Trade Representative Jamieson Greer in announcing the new fees.
“The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for US-built ships.”
Labor unions in the American steel and shipbuilding industries praised the measures as beneficial steps toward bolstering domestic shipping capabilities.
However, dockworkers could see jobs disappear as fewer ships arrive at US ports to avoid the new levies.
“Less volume coming into the ports means fewer dockworkers,” warned Larry Gross, president of Gross Transportation Consulting.
The funds collected through the docking fees would directly support the US shipbuilding sector — a once-thriving industry that has shifted primarily toward naval contracts due to declining commercial demand.
But building those ships takes time, and a whole lot of money that isn’t readily available, experts said.
“I can understand President Trump’s desire to reduce our reliance on China,” but he “can’t change it like a spare tire on your car,” said Sohn, a lecturer at Loyola Marymount University.
China has cornered the market on shipbuilding by undercutting countries that once boasted a robust presence in the sector, such as South Korea, he added.
A super carrier that can ferry more than 10,000 20- or 40-foot containers costs hundreds of millions of dollars to construct, making them cost-prohibitive to build in the US.
“We are not equipped to build ships in the US,” Gross told The Post. “We don’t have the shipyards or workers or any of the components to build ships at scale. … We are talking about ramping shipbuilding here essentially from scratch, you are talking about years and years.”
Gross added that the financial and political uncertainty surrounding such efforts will deter private investment – especially with Trump’s tendency to walk back plans as part of his negotiating tactics.
“These would be billions of dollars, and in order for someone in the private sector to contemplate taking that risk, there has to be visibility into the future and a sense of stability, which is utterly lacking right now. A policy is put in place and there is no confidence that the policy would last a week, let alone a decade.”
The levies also sparked concern among American importers who depend heavily on Chinese vessels for transporting a wide array of goods from crude oil to consumer products.
During hearings in March, opponents highlighted that the proposed measures would raise prices, disrupt trade flows and pose challenges for American ports.
They also expressed skepticism that fees alone could significantly undermine China’s substantial maritime dominance, which has been established over recent decades.
Rep. Angie Craig (D-Minn.), the ranking Democrat on the House Agriculture Committee, warned that the fees could negatively impact American farmers reliant on exporting their products.
A secondary phase scheduled to begin in three years would introduce incremental restrictions over 22 years on foreign-built vessels transporting liquefied natural gas.
The US is currently the world’s largest LNG exporter.
Credit: Source link
