Tit for tat: USTR vs China port fees

USTR

On 17 April 2025, the US Trade Representative (USTR) issued a Notice of Action and Proposed Actions in a Section 301 Investigation of China’s Targeting the Maritime, Logistics and Shipbuilding Sectors for Dominance.

The Notice proposed imposing service fees on the maritime transport services of “Chinese operators and shipowners”, among others, which are due to come into effect on 14 October 2025.

The USTR fees

The proposed fees, those who would be subject to them and on what basis any exemptions would operate were set out Annexes I – IV of the Notice, as most recently modified / clarified by a Notice of Modification and proposed Modification issued by the USTR on 10 October 2025. These are as follows:

The fees are not intended to be cumulative.

The applicable fee is assessed according to the following hierarchy:

• Annex IV (LNG exports);
• Annex III (non-US car carriers);
• Annex I (Chinese owners/operators); and
• Annex II (Chinese-built ships).

Therefore, if a Chinese owned / operated vessel is also Chinese built, it will only pay the fee for being Chinese owned / operated, but not also for being Chinese built.

According to the latest Notice of Modification and Proposed Modification, there is a deferment of fees for certain vessels under certain Annexes until 10 December 2025. These principally affect LGCs, LPGS and vehicle carriers of up to 10,000 dwt “that may be subject to fee modifications proposed [in the Notice] for either Annex I or Annex III”.

The lead up to 14 October

Notwithstanding that the majority of USTR fees are due to start being payable on 14 October, there remains a lack of clarity as to how precisely the fees will be levied and administrated.

The industry had been expecting a set of FAQs from USTR to deal with outstanding questions such as whether a time charterer or ship manager would be considered an ‘operator’ or how / whether finance arrangements (a Chinese bank for example under a sale and lease back arrangement) would impact upon this. These have not been materialised.

Instead, US Customs and Border Protection (“CBP”) has released guidance on the implementation of the service fees (CSMS #66427144) which states as follows:

• On or before the entry of the vessel at the first US port or place on a particular voyage, the vessel operator must pay the applicable fee.
• The burden for determining if a vessel owes the fee is on the operator, not CBP.
• Responsible parties are urged to pay fees prior to the vessel’s arrival as lack of proof of payment may cause denial of loading or discharging operators
• Payment should be initiated at least three business days in advance of vessel arrival.

The Ports of New Orleans, Mobile, Houston and Galveston have issued guidance as well which seems to confirm that ownership will be determined by the vessel’s registry and the operator will be verified through review of the Certificate of Financial Responsibility (“COFR”). Ports may also request other documents like a Bridge Letter or Continuous Synopsis.

Some clarification of how the Annexes shall be interpreted was also set out in the USTR’s Notice of Modification and Proposed Modification of 10 October 2025 are these are captured in the table above.

Chinese retaliation

On 10 October 2025 China’s Ministry of Transport announced retaliatory port fees on U.S. owned or operated vessels that will come into effect on the same day as the implementation of Section 301 of USTR, i.e. on Tuesday, 14 October 2025. The announcement can be found here:

https://xxgk.mot.gov.cn/2020/jigou/syj/202510/t20251010_4177939.html

The fees will apply to ships calling at China which are:

1. owned by US companies, other organisation and individuals; and/or
2. operated by US enterprises, other organisations and individuals; and/or
3. owned or operated by enterprises or other organisations in which US enterprises, other organisations and individuals directly or indirectly hold 25% or more of the equity including board seats and voting rights; and/or
4. flying the US flag; and/or
5. built in the US.

The fee structure mirrors the USTR one, with fees per net ton to be applied. There is also a ramp up in fees as follows:

• RMB 400/nt charged from 14 October 2025,
• RMB 640/nt charged from 17 April 2026,
• RMB 800/nt charged from 17 April 2027 and
• RMB 1,120/nt charged from 17 April 2028.

If a vessel calls at multiple Chinese ports on the same voyage, it shall pay the special port dues only at the first port of call and shall not be charged at subsequent ports of call. Special port dues may not be charged for more than five voyages of the same vessel in a year.

Research by Tradewinds shows that many publicly listed shipowners’ investor bases are made up of more than 25% US shareholders and therefore whether these publicly owned shipowners will all be affected by the above fees will depend to a certain extent on how “25% ownership” is interpreted i.e. must it be one individual, or can it be combined US investors. If the latter, then it is likely to mean that the incoming Chinese rules will impact a wider range of shipowners than the equivalent US regime.

Whether this announcement will ultimately delay the implementation / coming into force of the port fees in both countries remains to be seen, although the rhetoric suggests very much otherwise.

If both sets of port fees come into force on Tuesday, there may well be significant disruption at ports in the US and in China, although it was subsequently announced by the Chinese Ministry of Transportation following their announcement of 10 October 2025 of the tariff system that:

• There will be up to a 50% discount to the proposed fees for the first 30 days for all pre-ordered port calls/arrivals.
• A discount of up to 10% will be offered on ‘environmentally friendly’ tonnage and small public vessels.
• A 1:1 discount will be offered for all newbuilding orders placed in China during the construction of the vessels (for a maximum period of 3yrs), i.e. for each newbuilding on order one (1) operating vessel will be exempt the proposed additional port call fee.

Charterparty clauses

Given the potential lack of clarity as to what the position would be under, e.g. an unamended time charter (Would the fees be “port charges” for which the charterers would normally be responsible? Would Owners be entitled to be indemnified under the general indemnity?) a number of clauses sprang up to deal with the introduction of the USTR fees, first of all, between 21 February 2025, when the USTR first released its initial notice / proposal for the fees and 17 April 2025, when further detail was provided about the structure of the fees.

Those clauses were essentially premised on the basis that the charterer pays but that both parties would have the right to cancel the charter, with certain provisions for what would occur if the vessel was already laden. See Intertanko’s US Chinese Nexus Fees Clauses for period time charters and voyage charters / time charter trips, for example.

In relation to the Chinese tariffs, there may now be a short window where such clauses may once again be required to go into a charter being fixed now for calls at China.

Following 17 April 2025 a number of longer term clauses were published, also very much on the assumption that the charterers would pay, such as Intertanko’s Liability for US Chinese Nexus Fees Clause and BIMCO’s USTR clause. The latter places obligations on the owners as regards warranties relating to the vessel’s ownership / operator / build. Even where the BIMCO clause is not being used, charterers are asking for warranties from owners along these lines as a quid pro quo for what naturally seems like a charterers’ cost.

If / when the Chinese tariff system comes into operation then versions of the existing longer term clauses might be relatively easily amended to suit, but would need to be agreed and incorporated.

For vessels already underway to Chinese ports, the question of who may end up bearing any fees imposed in China and whether any delay while they are paid will fall within the off-hire and/or laytime and demurrage provisions of an existing time charter and/or voyage charter will be a question of the terms of each charter.