The actions were proposed under Section 301 of the Trade Act of 1974, which gives the USTR, part of the Executive Office of the President, broad powers to investigate and act in matters of trade. After launching an investigation into China’s maritime, logistics and shipbuilding sectors in April 2024, the USTR proposed the actions on February 21 and sought public feedback by March 24.
Multiple industry groups spoke out against the proposed port fees in the lead-up to and during the hearings. Kathy Metcalfe, President and CEO of the Chamber of Shipping of America, said replacing Chinese-built vessels “is not like flipping a light switch” and highlighted the structural challenges facing U.S. shipbuilders.
Data from China’s Ministry of Industry and Information Technology show that in 2024, China accounted for 55.7 percent of vessel completions and an overwhelming 74.1 percent of new orders worldwide. In contrast, the U.S. held a negligible share of less than 1 percent of the global shipbuilding market, according to the findings of the USTR investigation.
China’s shipbuilding strength is driven by vertically integrated supply chains and labor costs much lower than those in the U.S. The U.S. commercial shipbuilding sector, however, remains trapped in a negative feedback loop, where container ships are built at four to five times the cost of their Asian counterparts, relying heavily on imported components. Industry insiders said the USTR’s proposed actions alone will not resurrect supply chains that have been eroding over decades.
The proposed actions have also drawn strong opposition from other sectors within the U.S. According to Alejandra Castillo, President and CEO of the North American Export Grain Association, U.S. exports of grain, oilseeds, and their co- and by-products support over 450,000 American jobs and contribute $174 billion to the U.S. economy annually.
Castillo noted that these markets are highly competitive, characterized by low margins and strong price sensitivity, and said there is growing concern that the implementation of the proposed measures could cause irreversible damage to U.S. bulk agricultural exports and undermine the significant trade surplus they currently generate.
A March report by Trade Partnership Worldwide LLC, an international trade and economic research firm, also warned that if all of the measures proposed by the USTR were implemented, U.S. total exports of goods and services could fall by 7.2 percent, while imports of goods and services might decline by 5 percent.
This latest U.S. maritime protectionism recalls historical examples, like the 1920 Jones Act, which raised domestic shipping costs to three times the global average. The law required U.S. waterborne trade to use ships built, owned and operated by Americans. However, it led to a decline in domestic cargo ships, as U.S. vessels were typically four times more expensive to build than European or Asian ships due to labor and material costs.
The newly proposed port fees also face the serious risk of isolating U.S. businesses while failing to achieve their intended economic revival, thereby joining growing list of current trade protection policies inflicting short-term pain on Americans without the prospect of long-term gain. –The Daily Mail-Beijing Review news exchange item
