US Imposes Heavy Sanctions on Chinese Maritime Sector

• The recent announcement by the United States Trade Representative (USTR) regarding new port fees targeting China’s shipbuilding and maritime transport sector has sparked significant debate in the shipping industry. The proposed regulations would apply to Chinese shipping companies, operators with Chinese-built vessels in their fleets, and firms that have placed new orders with Chinese shipyards, potentially reshaping global maritime trade.
• The new fee structure proposed by the US raises legal and trade-related concerns within international maritime law and global commerce agreements.
• Imposing additional costs exclusively on ships from a specific country could be considered discriminatory under World Trade Organization (WTO) rules. China may challenge this measure under the Trade-Related Investment Measures (TRIMs) agreement.
• The 1982 United Nations Convention on the Law of the Sea (UNCLOS) emphasizes the principles of freedom of navigation and non-discrimination in maritime trade. Although the US is not a signatory to UNCLOS, such a policy shift could spark legal disputes over international trade balances.
• This measure may also prompt retaliatory actions from China, potentially leading to new tariffs or access restrictions for US-flagged or US-operated ships, further impacting global trade flows and competitiveness within the maritime sector.
• Rising freight costs for US grain, coal, and energy exports may reduce competitiveness in global markets.
• Alternative trade routes could emerge, with South America supplying grain and Australia exporting coal as substitutes for US products.
• Higher costs for Chinese-built vessels could increase transportation expenses, potentially passing these costs on to US importers and consumers.
• Inflationary pressures in the US domestic market may intensify as import costs rise.
• The resale value of Chinese-built vessels could decline, while demand for South Korean and Japanese-built ships may increase.
• US-based companies may reconsider ship orders, shifting to different shipyards or changing flag states to bypass new tariffs.
• The policy could lead China to strengthen its trade relationships with Europe, the Middle East, and South America.
• There could be increased demand for shipbuilding in South Korea and Japan.
• The US may introduce incentives to support domestic shipbuilding and reduce reliance on foreign vessels.
• This development adds further concerns for other shipyards worldwide, potentially halting new investments.
• Concerns regarding existing contracts of affreightment (COAs) may pressure shipowners and operators, as their previously signed agreements risk becoming unprofitable and could lead to financial This situation could further impact insurance companies, including Protection and Indemnity (P&I) clubs, by increasing claims and financial liabilities.
• The current orderbook includes over 2,500 vessels under construction across multiple shipyards in However, few vessels use China as their flag state. A significant number of China-built vessels calling at US ports operate under other flag states, such as the Marshall Islands, Liberia, and Panama. As of today, only 10 Chinese-flagged vessels are scheduled to call at US ports until the end of March, the majority within the bulk segment. Nonetheless, when considering the broader context, the situation becomes more complex as China has delivered 55% of all new buildings since 2024.
• This policy could fundamentally alter dynamics within the global shipping industry. Trade routes, ship orders, and fleet compositions could shift as businesses adapt to new regulatory constraints.