Following a proposal published in February, the Office of the United States Trade Representative (USTR) largely walked back its planned $1 million USD port fees imposed per vessel per entry in U.S. ports, and released notice on April 17 that it will use Section 301(b) of the Trade Act of 1974 (Section 301) to phase in fees, impose an annual cap on those fees, and exempt certain vessels based on, e.g., U.S. ownership, vessel type, cargo (LNG or U.S. government cargo), or voyage distance. USTR also proposed further tariffs on ship-to-shore cranes and other cargo movement equipment, and invited public comment on such proposals by May 19, 2025.
Background
Twelve months ago, in response to a petition filed by U.S. labor unions, USTR initiated a Section 301 investigation into the acts, policies, and practices of the People's Republic of China (PRC) regarding the maritime, logistics, and shipbuilding sector. USTR published its determination on January 23, 2025, concluding that the PRC had undertaken, by top-down industrial planning, to dominate those sectors, and "severely disadvantag{ed} 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."
A month later, USTR proposed a set of responses, including the following port fees:
- Service fees on international maritime transport by PRC vessel operators — up to $1M per vessel entrance at a U.S. port or $1K per ton of capacity, per vessel entrance at a U.S. port, whether or not the particular vessel was PRC-built; and/or
- Service fees on international maritime transport by PRC-built vessels — up to $1.5M per vessel, or on sliding scales ranging from $500k to $1M per vessel entrance at a U.S. port based on the proportion of the vessel operator's fleet that is PRC-built; and/or
- Service fees on maritime operators with orders for PRC-built vessels — sliding scale from $500k to $1M per vessel entrance based on the proportion of an operator's vessel orders or anticipated near-term deliveries with PRC shipyards; or a $1M per vessel entrance charged to all operators whose vessel orders or anticipated near-term deliveries from PRC shipyards exceed 25% of the total. Unlike the foregoing two fees, proposal was not limited to international maritime transport.
USTR also proposed a counterbalancing refund system for the use of U.S. vessels and imposing requirements that specified percentages of annual exports must occur on U.S.-flagged vessels by U.S. operators.
USTR received comments and held a hearing on these proposals. With April 17 as the statutory deadline for determining a course of action, the announcement is the culmination of USTR's investigation, but the statute also provides USTR certain authority to modify actions in the future.
Phase-In Period: Certain Port Fees Begin in 180 Days
USTR has established three types of port fees (Annexes I, II, III). These fees are not intended to stack, such that only one type of fee may apply to a given vessel unless an Annex II exemption applies. These exemptions exclude port fees on shipments of U.S. Government cargo, empty vessels entering U.S. ports, certain small capacity vessels, vessels traveling less than 2,000 nautical miles from a foreign port, U.S. owned vessels, liquid chemical transport vessels, and lakers vessels.
If applicable, the port fees will begin on October 14, 2025, in the following order of priority:
- Operators of Foreign-Built Vehicle Carriers
- PRC Vessel Operators or PRC Vessel Owners
- PRC-Built Vessels
USTR ultimately determined not to adopt its proposal to assess a fee based on maritime operators' fleet composition.
Operators of Foreign-Built Vehicle Carriers (Annex III)
Non-U.S.-built vehicle carriers must pay a fee equal to $150 per car equivalent unit (CEU) capacity at the first U.S. port or place from outside the Customs territory. Vehicle carriers must be so designated on CBP Form 1300. In lieu of the proposed refund system, vessel owners can avoid this fee for a particular vessel for up to three years by ordering and taking delivery of a U.S.-built vessel of equal or greater CEU.
Annex III defines "U.S.-built" by requiring not only that the vessel be built in the United States, but also that all major components of the hull and superstructure and other specifically enumerated components be manufactured in the United States, from melt & pour through coating. This same definition is used in both Annexes II and IV as well.
PRC Vessel Operators or PRC Vessel Owners (Annex I)
The operator of a PRC-operated or PRC-owned vessel must pay a fee equal to $50 per net ton. The fee may be charged up to five times per year, per vessel, and is assessed at the first U.S. port or place from outside the Customs territory on a particular string of U.S. port calls. The fee increases by $30 a year beginning in 2026, topping out at $140 in 2028. Such fees represent a significant reduction of the original proposed fees that were to be assessed on a per-vessel, per-entry in a U.S. port basis.
Vessel Operators and Vessel Owners are defined as the entities so identified on U.S. Customs and Border Protection (CBP) Form 1300. USTR also provides an expansive definition of what it means to be "of China" for purposes of this fee. That encompasses PRC citizens; PRC headquartered entities; PRC incorporated entities; companies owned or controlled by PRC citizens or PRC military companies; or companies controlled by or subject to the jurisdiction or direction of the PRC. The last of these encompasses, e.g., entities having 25% or more direct or indirect equity ownership held by PRC nationals or residents. Finally, ocean common carriers whose operating assets are directly or indirectly controlled by a local or national PRC government-controlled entity. Here, "control" has a somewhat narrower definition, limited to majority ownership or the ability to appoint or veto appointment of most executives. For purposes of this rule, the PRC expressly includes Hong Kong and Macau.
PRC-Built Vessels Owned by Non-PRC Entities (Annex II)
PRC-built vessels not subject to Annex I or Annex III will be subject to Annex II, unless they fall within an exception. "PRC-built" refers to the place of build identified on CBP Form 1300, consistent with applicable regulations. This fee amounts to the higher of $18 per net ton or $120 per container discharged. As with Annex I, the fee may be charged up to five times per year, per vessel, and is assessed at the first U.S. port or place from outside the Customs territory on a particular string of U.S. port calls. Each fee will increase annually, beginning on April 17, 2026, topping out at $33 per net ton and $250 per container discharged after April 16, 2028. Vessel owners can avoid this fee for a particular vessel for up to three years by ordering and taking delivery of a U.S.-built vessel of equal or greater net tonnage.
Finally, Annex II exempts U.S. government cargo and the following types of Chinese-built ships from the fees:
- U.S.-owned or U.S.-flagged vessels enrolled in the Voluntary Intermodal Sealift Agreement, the Maritime Security Program, the Tanker Security Program, or the Cable Security Program;
- Vessels arriving empty or in ballast;
- Vessels with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons;
- Vessels entering a U.S. port in the continental United States from a voyage of less than 2,000 nautical miles from a foreign port or point;
- U.S.-owned vessels, where the U.S. entity owning the vessel is controlled by U.S. persons and is at least 75 percent beneficially owned by U.S. persons;
- Specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms; and
- Vessels principally identified as "Lakers Vessels" on CBP Form 1300, or its electronic equivalent.
USTR suggests in its response to comments that the vessel size, empty vessel, and short voyage exemptions were intended to benefit certain export commodities, without expressly excluding vessels on an export commodity basis.
Alternative to Port Fees for LNG Vessels (Annex IV)
Vessels designed to transport liquefied natural gas (LNG) internationally will not be subject to port fees. Instead, USTR has established a phased requirement to use a gradually increasing proportion of U.S. vessels, which will be enforced by means of an export license requirement.
The LNG restrictions do not take effect until the one-year period beginning April 17, 2028, during which one percent of U.S. LNG exports (measured by reference to the prior calendar year's total) must be exported by a U.S.-flagged & U.S.-operated vessel. Beginning in the next annual period, such vessels must also be U.S.-built. Thereafter, the amount increases gradually, topping out at fifteen percent in 2047. However, vessel owners can avoid these export license requirements for a particular vessel for up to three years by ordering and taking delivery of a U.S.-built vessel of equal or greater LNG capacity, in cubic feet. For others, failure to meet export license requirements would empower USTR to direct the suspension of such licenses.
Further Tariffs Proposed; Chinese Control Continues to be USTR's Central Focus
In addition to the fees and vessel restrictions set to take effect, USTR has proposed additional tariffs for certain ship-to shore (STS) cranes and other cargo handling equipment. As proposed, these tariffs would stack on top of other duties related to national security (e.g., Section 232 of the Trade Expansion Act of 1962), national emergencies (e.g., the International Emergency Economic Powers Act), Column 1 of the Harmonized Tariff Schedule of the United States (HTSUS), and dumping and subsidization.
According to the USTR Report, the PRC holds an overwhelming share of STS crane, intermodal chassis, and shipping container production. The USTR Report highlights the vulnerabilities stemming from an over-reliance on PRC production of STS cranes and other maritime equipment, suggesting that this dependency could allow the PRC to manipulate the United States' maritime infrastructure.
To address this area of concern, USTR first proposes to assess 100% duties on STS cranes having one or more specifically named components (both physical parts and information technology equipment), that are products of the PRC or were manufactured by a company owned or controlled by a PRC national. For purposes of this requirement, the concept of "control" is defined expansively, to include scenarios where an STS component "transited through or was stored in, any territory of the PRC, including any free trade zone" or was "installed by an employee or contractor of a company or other entity" that is subject to the "effective control of a Chinese person or legal entity." Moreover, PRC-controlled companies are defined to include those formed outside the PRC (e.g., in the United States) but with 25% of the equity interest being directly or indirectly held by PRC citizens, PRC-based companies, or PRC government entities.
USTR also proposes duties of between 20% and 100% on containers, chassis, and chassis parts that are products of the PRC.
Affected products are classified in subheadings 8609.00.00 (Containers), 8716.39.0090 (Chassis), 8716.90.30 (Chassis Parts), 8716.90.50 (Chassis Parts), and 8426.19.00 (STS Gantry Cranes) of the HTSUS.
Opportunity for Comment & Public Hearing
Accompanying the proposed new duties on Chinese maritime equipment is a request for public comment. Specifically, USTR seeks input on the following:
- The specific products to be subject to increased duties, including whether the tariff subheadings and product descriptions listed in Annex V of the unpublished federal register notice, should be retained or removed, or whether tariff subheadings not currently on the list should be added;
- The level of the increase, if any, in the rate of duty; and
- Whether the increased duties should take effect in 180 days, or over a phase-in period of 6 to 24 months.
Comments on the proposed action must be submitted by May 19, 2025. A public hearing on the actions will also be held that day. Requests to appear at the hearing are due May 8, 2025, and there will be a brief post-hearing rebuttal period.
Cassidy Levy Kent can assist with preparing and filing comments for consideration by USTR.
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