By Eric Huang    Photo：CANVA

Since returning to office, President Donald Trump has prioritized addressing the U.S.-China trade imbalance as a central focus of his administration. Beyond the well-known tariff wars of his previous term, a new front has opened—this time not on goods, but on shipping vessels themselves. On April 17, 2025, the Trump administration announced that it would impose punitive fees under Section 301 of the Trade Act on all vessels that are built, registered, or owned by Chinese entities. These vessels will be subject to high fees whenever they call at U.S. ports, marking a significant escalation that has sent shockwaves throughout the global logistics ecosystem. Shipping lines, port operators, and import/export companies are now grappling with the resulting disruptions and uncertainty.

Let us first explore the legal foundation for this policy. Section 301 of the U.S. Trade Act of 1974 grants the Office of the United States Trade Representative (USTR) the authority to investigate and respond to foreign trade practices deemed “unjustifiable, unreasonable, or discriminatory,” and that burden U.S. commerce. The Trump administration previously invoked this provision to impose tariffs on hundreds of billions of dollars' worth of Chinese imports, igniting a prolonged trade war. What makes the April 17 announcement unprecedented is the extension of punitive measures beyond cargo to the vessels themselves. According to official statements from the White House and the USTR, the new measures will include:

• A steep penalty fee ranging from $1 million to $5 million per Chinese-built or flagged vessel entering a U.S. port
• Increased scrutiny and delays during customs and port inspections
• Potential prioritization restrictions or outright access limitations at select ports for Chinese vessels

This marks the first time that Section 301 has been applied to physical vessels, creating a landmark legal and operational challenge for the global shipping industry.

China currently dominates the global shipbuilding market, accounting for more than 50% of the world’s commercial vessels. The Trump administration argues that this dominance is the result of state subsidies, unfair industrial policy, and government-backed competition that disadvantages other global shipbuilders. Therefore, this policy serves three strategic objectives:

• Retaliate against Chinese state subsidies in the shipbuilding industry
• Reduce U.S. dependence on Chinese-built ships and strengthen national security resilience
• Pressure China back into bilateral trade negotiations on more favorable terms for the U.S.

With the return of Trump-era protectionism, anti-China sentiment has gained renewed momentum. Targeting Chinese vessels aligns with the interests of U.S. domestic stakeholders—manufacturers, port labor unions, and steel producers—while reinforcing Trump's hardline stance and appealing to his electoral base.

However, it remains unclear whether the policy will apply exclusively to Chinese-flagged vessels or also include all ships constructed in China, regardless of ownership or registration. If Chinese-built vessels are included, major international carriers such as Maersk, MSC, ONE, and HMM will inevitably be impacted, given that a significant portion of their fleets originate from Chinese shipyards.

This issue was already a hot topic at the annual TPM 25 conference held in Long Beach, California, earlier in March, where shipping executives expressed growing concern. As an initial response, carriers are expected to explore the following strategies:

• Port Diversion: Redirecting services to Canadian (e.g., Vancouver, Quebec) or Mexican (e.g., Manzanillo) ports, followed by inland transit into the U.S.
• Slot Swapping and Transshipment: Utilizing non-Chinese-built vessels to call at U.S. ports, transferring cargo from vessels that would otherwise be subject to penalties
• Fleet Realignment: Accelerating vessel redeployment or time-chartering non-impacted tonnage
• Contract Renegotiation: Passing on additional costs to beneficial cargo owners (BCOs)

Shipping alliances that deploy Chinese-owned or built ships on joint services will also face increased pressure to restructure rotations and reallocate vessels across trade lanes.

For U.S. port operators—especially those along the West Coast like Los Angeles and Long Beach—this policy is expected to cause a number of operational complications:

• Longer customs clearance times
• Increased vessel waiting times, leading to lower port throughput efficiency
• Ambiguities in vessel origin verification and compliance enforcement

Some port authorities and labor unions have already called on the federal government to provide clearer enforcement guidelines to avoid on-site operational gridlock. If the policy remains in effect, Canadian and Mexican ports stand to benefit significantly, echoing the logistics shifts observed during the pandemic-era congestion crisis, when shippers turned to alternate gateways via rail or road from neighboring countries.

In response to the increased cost burden, industry sources report that shipping lines are preparing to introduce a range of surcharges, including:

• U.S. Port Entry Risk Surcharge
• General Rate Increases (GRIs) specific to affected lanes
• Two-stage transshipment and relay fees

Spot freight rates on transpacific routes—particularly eastbound to the U.S.—are expected to surge again. As a result, American importers will face higher landed costs, longer lead times, and heightened uncertainty. Many BCOs may need to reevaluate their incoterms and supply chain strategies, shifting from traditional FOB arrangements to EXW or DAP terms for better risk control.

The policy has also raised serious legal questions, as it has not been sanctioned by the World Trade Organization (WTO), nor has it gone through a formal trade dispute process. Critics argue that the policy violates several WTO principles, including:

• Most-Favored-Nation (MFN) treatment
• Non-discrimination
• Transparency and due process in punitive measures

The Chinese government is likely to file a complaint at the WTO, potentially triggering a formal trade dispute. Meanwhile, major shipping and logistics associations—such as the World Shipping Council (WSC), BIMCO, and various port authorities—are expected to file lawsuits in U.S. federal court. Their legal arguments will likely challenge the policy’s ambiguous definitions, constitutional validity, and implementation risks, and seek injunctions against enforcement.

If the policy is upheld and enforced over time, we can expect a broad strategic shift across the maritime sector:

• Future vessel orders may shift decisively toward South Korean and Japanese shipyards
• Global carriers will prioritize optimizing non-Chinese-built fleet deployment
• Transshipment, consolidation, and multimodal logistics will become increasingly essential to navigating regulatory bottlenecks

At the supply chain level, companies are likely to accelerate reshoring and nearshoring initiatives, particularly in North America. Strategies such as regional manufacturing, decentralized warehousing, and end-to-end visibility will gain traction as firms seek resilience against politically driven trade barriers. Ultimately, this Section 301 extension into the maritime domain represents more than just another trade sanction—it signals a structural shift in the global logistics landscape. By taxing not just what ships carry, but the ships themselves, the U.S. is redefining the battlefield of international trade. Logistics will no longer be a game of cost-efficiency alone, but one influenced by geopolitics, national security considerations, and long-term realignment of global industrial infrastructure.

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