Executives say that Trump's port charges on Chinese ships will threaten the US maritime industry

Industry executives testified at the U.S. trade representative hearings that President Donald Trump's plans to revive the U.S. Shipbuilding Industry are likely to fail because they rely on proposed fees for China-linked ships, which will harm domestic ship operators, ports, exporters, and jobs.

The proposed fees could reach $3 million for each port visit in the United States. The Trump administration claims that the fees will curb China's increasing commercial and military dominance in the high seas, and promote vessels built domestically. U.S. Steelworker Unions and U.S. Steel Producers support the effort. They say it will boost their industry.

The idea of Trump rebuilding the U.S. Shipyards has shocked the maritime industry in the United States because it threatens to destroy the very shipping companies and clients that drive the demand for orders.

Edward Gonzalez, CEO at Florida's Seaboard Marine, largest U.S. owned international ocean cargo carrier testified Monday that "national interest" would not be served by efforts to boost American shipbuilding if they unintentionally destroyed American-owned carriers.

Seaboard, like many U.S. operators relies on vessels manufactured in China. According to Alphaliner, a maritime data provider, 16 of its 24 ships are made in China.

U.S. vessel owners said that the new fees for Chinese-linked ships would also push more U.S. freight to foreign-owned shipping companies with the resources to weather the changes.

According to USTR, China’s share in the shipbuilding industry grew from less that 5% in 1999 up to more than 50 % in 2023.

Speakers said that U.S. shipyards produce fewer than ten ships per year, while Chinese shipyards produce more than 1,000.

However, executives in the industry said that shipbuilders from Japan and Korea will be able to compete with each other.

Struggle to meet demand

It would take the U.S. shipyards years to increase their capacity.

Kathy Metcalf is the CEO of Chamber of Shipping of America. She said that replacing existing vessels built in China was not as simple as flipping a switch. "Penalizing China or the U.S. maritime transportation system is an unacceptable result."

U.S. vessel owners support key American industries such as manufacturing, mining and agriculture. They transport goods from and to inland waterways and across the Great Lakes, up and down America's coastlines.

Already, agriculture exporters are experiencing a decline in their income.

Trouble booking

The USTR plan is uncertain, which has caused the coal industry to say that the new fees make it difficult to sell their products on the global market.

Mike Koehne is a board member of the American Soybean Association who grows corn and soybeans in Indiana.

JOB LOSSES

Nate Herman is the senior vice president for policy at the import-dependent American Footwear and Apparel Association. He said that the port fees will result in the loss of American jobs, increased costs for American imports and exports, as well as shortages and higher prices for American customers.

He quoted a

new study

The report by a number of trade groups shows that the higher fees will cause U.S. Exports to drop by nearly 12%, and GDP to decrease by 0.25 %.

Herman stated that "Hardworking American families can't afford any more price increases or product shortages. And American manufacturers and farmers can't afford to lose export markets."

USTR did not respond immediately to requests for comments. The USTR is currently seeking feedback in hearings on Monday and Wednesday, before finalizing its proposal under the unfair trade practices laws.

For vessel operators to avoid paying the current fees, they must be outside of China and have a fleet with less than 25% of their ships being built in China. They also cannot have any Chinese shipyard deliveries or orders scheduled in the next two year.

An executive order draft seen earlier this month would further narrow the gap by charging port fees to all fleets that have vessels built in China.

Vessel owners can minimize the impact by using larger ships and limiting their calls to large U.S. port - a strategy of feast or famine that would starve smaller ports, overwhelm the largest, and cause supply chain stress reminiscent of the early days COVID.

According to vessel and ports operators, ship operators could also shift U.S. bound cargo to Canada and Mexico and rely on trains and trucks to complete the journey. This would cause more congestion at border crossings and wear and tear to infrastructure. (Reporting from Lisa Baertlein and David Lawder, in Los Angeles; editing by Nick Zieminski & Stephen Coates).

(source: Reuters)