The Trump administration’s proposal to impose fees of up to $1.5 million per U.S. port call on Chinese-built ships has raised concerns about potential supply chain disruptions. While we expect most of this posturing to stoke dialogue and negotiation, the following may occur:

  • Some Chinese-built vessels may reroute to Mexican ports (e.g., Manzanillo and Lazaro Cardenas) to avoid U.S. fees.
    • Container bookings from China to Mexico are already up 74% week-over-week.
    • However, importing via Mexico and trucking goods into the U.S. would add extra handling, inland freight costs, and delays, potentially offsetting any savings from avoiding Chinese vessel fees.
  • A more likely scenario is that ocean carriers will shift their Chinese-manufactured assets to other trade lanes (especially the mammoth Europe market) while deploying Korean and Japanese-made assets for the United States and North America. This kind of shift will be highly disruptive for service reliability for several months.
  • The shipping lines have made billions over the last several years since the COVID surge and breaking down the fee, would only add an estimated $100-150 per container. It’s likely shipping lines would ignore this or pass it on to the importer.    Note:  to realize a cost of $100-$150, ALL global cargo would pay this “tax.”
  • If the goal is to boost U.S. shipbuilding, it’s doomed from the start. The last containerships built in the U.S. were Matson’s two 3,600-TEU ships in 2017, which cost $209 million each—more than five times the cost of building a much larger 18,000-TEU vessel in China, Korea, or Japan.
  • With 60% of their newbuilds coming from Chinese shipyards, COSCO and OOCL face the biggest risks.
    • We expect major pushback on the administration from businesses like Walmart – COSCO’s #1 shipper.

The comment deadline is March 24th to submit any written comments to the USTR.

For the latest tariff news, be sure to check out our Trump’s Trade Tariff Updates page.

As always, Shapiro will continue to monitor updates and share any developments. If you have any questions, please don’t hesitate to Contact Us.