The U.S. Trade Representative is gearing up for hearings this week on the proposed port fees targeting Chinese vessels. Industry and maritime executives are expected to detail the adverse effect the levy would have on the U.S. economy and global trade as a whole.
The proposal could spell further uncertainty for global shipping following multiple rounds of tariffs against China, Canada, Mexico and the EU. The broad scope of the proposed fee, affecting up to 80 percent of vessels docking at ports on the Atlantic seaboard, could disrupt markets to an even greater degree than recent tariff action.
The proposal is part of President Donald Trump’s efforts to revitalize domestic shipbuilding. It would levy between $1m and $3m on Chinese ships calling at U.S. ports and fees could in some cases reach as high as $3.5m.
The proposed levies’ reach goes beyond impacting Chinese-built vessels. Shipping companies based in China or with more than a quarter of their vessels constructed in the country would also be affected. The fees also touch any operator with active orders or scheduled deliveries from Chinese yards in the next 24 months.
Over a third of the global trading fleet has been built by Chinese yards, with U.S.-made vessels accounting for just 0.4 percent. An estimated 83 percent of box carriers calling at U.S. ports last year would have been subject to the fees, with somewhat lower figures for car carriers and crude tankers, at two-thirds and one-third respectively, according to Clarksons Research Services.
Ahead of the hearings several officials released statements expression concerns over the policy. “They see this as more of a threat than the tariffs, because of the impact it’s going to have on the supply chain,” said Jonathan Gold, vice president of supply chains and customs policy at the National Retail Federation, as reported by Bloomberg.
“Carriers are going to pull out of certain rotations, so the smaller ports, Oakland, maybe Charleston, Delaware, Philly. They’re all going to suffer as a result,” he continued.
While the fees could generate up to around $50bn in revenues for the U.S. government, trade flows could see significant rerouting away from regional U.S. hubs to ports in Canada and Mexico. Land-based transport, such as railroads, could be the beneficiary of the policy. In an effort to reduce the number of port calls, vessel operators would likely begin using larger vessels concentrating traffic in just a handful of major ports, further stressing logistic chains.
Much of the additional cost could be passed on to consumers, several industry executives stated. U.S. inflation remains stubbornly above the Feds target rate of 2 percent.
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