The Trump administration expanded its trade war with China on Tuesday, beginning to impose fees on Chinese ships docking in U.S. ports.
The long-planned action aims to counter China’s dominance in commercial shipbuilding and help revitalize the U.S. shipbuilding industry, which has withered over the years.
China’s Transportation Ministry threatened retaliation Friday, saying it planned to impose taxes on U.S. ships when they dock in China. The maritime conflict comes as trade relations between China and the United States are once again faltering. Last week, after China announced tighter restrictions on rare earth minerals, President Trump threatened to impose more tariffs on the country, before tempering his tone somewhat.
Supporters of U.S. shipping measures say China has used the subsidies to gain an advantage in shipbuilding and that the taxes are a way to deter shipping carriers from buying Chinese ships.
“Anything we can do to reduce the shipbuilding disparity that exists between the United States and China is in our interest,” said Mihir Torsekar, a senior economist at the Coalition for a Prosperous America, a group that supports many of Mr. Trump’s trade actions.
The fees will take effect the same day as new tariffs on imported furniture, kitchen cabinets and lumber. The maritime taxes stem from a trade investigation launched under the Biden administration and must be paid by ships owned by Chinese shipping companies. Non-Chinese shipping companies will have to pay fees when sending Chinese-built ships to U.S. ports.
Non-Chinese shipping companies have purchased dozens of Chinese-made ships in recent years and are now trying to remove as many as possible from U.S. routes to avoid fees.
“Ship owners and operators are adjusting fleet deployments to mitigate the impact of fees,” said Utsav Mathur, a partner specializing in shipping and commodities at Norton Rose Fulbright, a law firm.
Shipping companies have said they have no plans to raise customer rates in response to the taxes.
But critics of the fees say they will make supply chains less efficient and ultimately raise the cost of imported products, many of which have been hit with high tariffs this year.
“Inefficiencies, as well as fees paid, will increase costs,” said Colin Grabow, associate director at the Cato Institute, a research organization favoring less government regulation of businesses. “It’s just a matter of when.”
Skeptics also doubt that the taxes will breathe much life into U.S. shipyards or do much to dampen China’s shipbuilding industry, which in recent years has increased its lead over that of Japan and South Korea.
China manufactured 60 percent of the world’s large ships in 2024, up from 44 percent five years earlier, according to BRS Shipbrokers. American ships can cost up to five times more than those built in Asia. So far this year, China has built 717 large commercial ships and the United States just one, according to BRS.
The new rules are the strictest for Chinese shipping companies, most of which cannot avoid taxes. HSBC, an investment bank, estimates that COSCO, a major Chinese shipping company, could pay $1.5 billion in fees next year, which the bank says could cut COSCO’s operating profits by almost three-quarters in 2026.
COSCO did not respond to a request for comment, but in an April statement the company said the U.S.-imposed fees “risk undermining the security, resilience and orderly operation of global industrial and supply chains.”
Matthew Funaiole, vice president of the Center for Strategic and International Studies, noted that MSC, a Swiss shipping giant, had placed orders for 12 large Chinese container ships this year. Shipping companies buying from China “will get a quality ship at low cost and in a quick time frame,” Funaiole said. This, he added, could offset the costs and inconvenience created by the new sanctions imposed on Chinese ships. MSC declined to comment.
U.S. sanctions on Chinese ships are unlikely to cause a rush of orders for U.S. ships, but they could help other efforts to revitalize U.S. shipbuilding. These include bipartisan legislation in Congress that would provide subsidies to the industry, although it is unclear when or if the bill will advance.
New funds have recently flowed into American shipyards.
Hanwha, a South Korean conglomerate with significant shipbuilding operations in the country, bought a shipyard in Philadelphia last year for $100 million.
Hanwha recently announced that its ship operating subsidiary had ordered 10 tankers and chemical tankers from the Philadelphia plant, a large order for a US shipyard. But that may not be indicative of broader market demand for U.S. ships as one branch of Hanwha buys from another.
Ryan Lynch, chief executive of Hanwha Shipping, the entity that ordered the ships, defended the transaction, saying its economics were sound. “We would never recommend anything other than best practices to our board,” he said. Mr Lynch declined to reveal how much Hanwha Shipping was paying for the vessels, saying only that it was a “market price”.
China added five U.S. Hanwha subsidiaries to its sanctions list on Tuesday, accusing them of “supporting and assisting” the United States in its efforts in the shipbuilding sector.
The order, which took effect immediately, prohibits Chinese companies or individuals from doing business with Hanwha units. Shares of Hanwha Ocean, the shipbuilding arm of the conglomerate, fell 8 percent following the news.
A Hanwha spokeswoman said the company was reviewing the Chinese action. “Hanwha will continue to provide world-class maritime services to our customers, including through our investments in the US maritime industry and through the Hanwha Philly Shipyard,” she added.
The Trump administration’s maritime actions do not only target Chinese vessels. All foreign ships carrying cars will be subject to fees, with a few exceptions.
Automakers have lobbied against auto carrier fees, saying they could add hundreds of dollars to the cost of a vehicle. One way to avoid the fee is to purchase a car carrier made in the United States. But shipping analysts estimate that building such a ship could take the U.S. shipbuilding industry many years.
“The idea that these fees will cause anyone to order an American-built car carrier is, I think, extremely remote,” said Mr. Grabow of the Cato Institute.
The administration also targets foreign-built ships that carry liquefied natural gas, a valuable U.S. export, but it has eased measures against such vessels under pressure from the oil and gas industry. The Office of the U.S. Trade Representative, the agency that formulates new shipping rules, said Friday it removed a provision that would have suspended LNG export licenses if a certain amount of gas was not transported on U.S.-made ships.
A spokeswoman for the trade representative did not respond when asked how the LNG requirements would be enforced without the threat of suspension of export licenses.
Daisuke Wakabayashi reports contributed.
