Introduction

On 21 February 2025, the Office of the United States Trade Representative (“USTR”) unveiled a sweeping proposal to impose port fees on all Chinese-owned or Chinese-built vessels calling at US ports (click here for more information). This move, rooted in a Section 301 investigation into China’s alleged unfair trade practices in the maritime, logistics, and shipbuilding sectors, could significantly disrupt global shipping operations and supply chains. For Chinese companies and international operators with ties to Chinese shipyards, understanding the proposal’s mechanics, legal ramifications, and mitigation strategies is critical.

Overview of the proposed fees

The fees are structured as follows:

1.       Fees on Chinese maritime transport operators:

        a.      Chinese-owned operators will be charged at the rate of up to US$1 million per entrance to a US port or at a rate of up to US$1,000/net ton of the vessel’s capacity.

        b.      This means a single vessel making multiple US port calls could incur fees in millions of dollars. 

2.      Fees for fleets with Chinese-built vessels

        a.      Operators with 50% or more Chinese-built vessels in their fleet will face fees of up to US$1 million per US port call.

        b.      Operators with 25-50% Chinese-built vessels will be charged up to US$750,000 per port call.

        c.      Operators with less than 25% Chinese-built vessels will pay up to US$500,000 per port call.

        d.      An additional fee of up to US$1 million per port call applies if 25% or more of the operator’s fleet is Chinese-built. 

3.      Penalties for future orders

        a.      Operators with 50% or more of their vessel orders from Chinese shipyards (or expected delivery within 24 months) will face fees of up to US$1 million per US port call.

        b.      Operators with 25-50% of orders from Chinese shipyards will pay up to US$750,000 per port call.

        c.      Operators with less than 25% of orders from Chinese shipyards will pay up to US$500,000 per port call.

        d.      A flat fee of up to US$1 million per port call applies if 25% or more of the operator’s total orders are from Chinese  shipyards. 

4.      Fee remission for US-built vessels

        a.      Operators using US-built vessels may claim refunds of up to US$1 million per US port entry on a calendar year basis. This is intended to encourage the use of US shipbuilding

(collectively, the “Proposed Fees”).

In summary, the Proposed Fees are designed to penalize operators with ties to Chinese shipyards or ownership, with escalating costs based on the proportion of Chinese-built vessels in their fleets or future orders. The remission for US-built vessels aims to shift demand towards American shipbuilding.

Commercial and operational implications

The financial impact of the Proposed Fees could ripple across global trade. Operators may reroute vessels to avoid US ports, favouring alternatives in Mexico or Canada. This diversion could lengthen transit times, increase logistics costs, and complicate supply chains for US-bound goods. Freight rates are also likely to rise as carriers will pass fees onto shippers, exacerbating inflationary pressures on consumer goods.

The Proposed Fees may further accelerate a decline in orders for Chinese-built vessels, pushing operators toward shipyards in South Korea, Japan, or Europe. Sectors heavily reliant on Chinese shipyards, such as container shipping (e.g., COSCO中國遠洋運輸) may face acute risks. Uncertainty over fee allocation could also delay contract negotiations and vessel deployments, creating operational bottlenecks.

Legal uncertainties and charterparty challenges

The Proposed Fees leave several critical terms undefined, creating significant ambiguity for stakeholders. For instance, it does not clearly specify who qualifies as an “operator”—whether this includes charterers, disponent owners, ship managers, or other entities involved in vessel operations—which could lead to disputes over liability for the fees. Similarly, the term “fleet” lacks clarity, raising questions about whether it encompasses vessels owned by subsidiaries, joint ventures, or single-purpose entities. Additionally, the proposal does not define what qualifies as “Chinese-built,” leaving uncertainty over whether vessels partially constructed or assembled in China, or those using Chinese components, would be subject to the Proposed Fees. These ambiguities could result in disputes over vessel classification and compliance.

Under standard charterparty terms, time charters typically require charterers to cover port charges, but fees tied to vessel ownership or construction could fall to owners. Voyage charters, governed by forms like GENCON 94, often assign vessel-related dues to owners, though amended clauses might shift liability.

Mitigation strategies

To navigate these challenges, companies should adopt proactive measures. Contractual protections are paramount. Explicit clauses allocating liability for US fees – such as requiring charterers to bear charges tied to vessel ownership or construction – can prevent disputes. Expanding force majeure language to cover “new tariffs, sanctions, or regulatory fees” and incorporating indemnity provisions for undisclosed shipyard ties may further shield parties.

Operational adjustments are equally vital. Diversifying shipbuilding sources to non-Chinese yards (e.g., South Korea, Japan) could mitigate future penalties, while partnerships with US shipbuilders might unlock fee remissions. Optimizing routes to minimize US port calls – such as transshipping via Canadian or Mexican hubs – could reduce exposure. Negotiating “US port surcharges” with shippers may also offset costs.

Conclusion

The proposal remains up for discussion as the USTR collates public comments and will hold a hearing on 24 March 2025. To be assured of consideration, public must submit post-hearing rebuttal comments seven calendar days after the last day of the public hearing.

As the situation unfolds, staying informed and agile will be key. Stakeholders should review existing agreements, model worst-case scenarios, and implement mitigation strategies to pass through this regulatory storm. While challenges loom, strategic foresight and collaboration may yet steer the industry towards calmer waters.

For enquiries, please feel free to contact us at:

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2025