The escalating trade tensions between the United States and China have now extended to maritime shipping, with both nations imposing additional port fees on vessels transporting a wide range of goods-from festive toys to crude oil-across international waters. This development marks the ocean as a critical battleground in the ongoing economic rivalry between the world’s two largest powers.
Last week, the prospect of a full-scale trade conflict resurfaced when China broadened its export restrictions on rare earth minerals, prompting US President Donald Trump to threaten a dramatic increase in tariffs on Chinese imports, potentially reaching triple-digit percentages.
However, following the weekend, both governments attempted to calm market anxieties by emphasizing ongoing dialogue between their trade representatives and the potential for negotiated solutions.
China confirmed the initiation of special port charges targeting vessels owned, operated, constructed, or flagged by US interests, while exempting ships built in China from these fees. According to details released by state media CCTV, exemptions also apply to empty vessels entering Chinese shipyards for repairs.
Mirroring the US approach, China’s fees are levied at the first port of call during a voyage or for the initial five voyages within a calendar year.
“This reciprocal imposition of maritime levies traps both economies in a cycle of escalating shipping costs, potentially disrupting global freight patterns,” noted Athens-based Xclusiv Shipbrokers in a recent analysis.
Earlier this year, the Trump administration unveiled plans to impose these charges on China-affiliated vessels to weaken Beijing’s dominance in the global maritime sector and stimulate American shipbuilding industries.
An investigation under the Biden administration concluded that China employs unfair tactics to control the maritime, logistics, and shipbuilding markets worldwide, paving the way for these punitive measures.
In retaliation, China announced last week that it would enforce its own port fees on US-linked ships starting simultaneously with the US fees’ implementation.
Independent dry bulk shipping expert Ed Finley-Richardson described the current situation as “a chaotic phase where stakeholders are quietly devising alternative strategies with mixed success.” He mentioned unconfirmed reports of US shipowners attempting to reroute cargo sales to other countries mid-voyage to circumvent the fees.
Reciprocal Actions and Industry Impact
Industry analysts predict that China’s state-owned container shipping giant COSCO will bear the brunt of the US-imposed fees, potentially incurring nearly half of the anticipated $3.2 billion cost in 2026 within the container shipping sector.
Leading container shipping companies such as Maersk, Hapag-Lloyd, and CMA CGM have proactively reduced their exposure by removing China-affiliated vessels from US trade routes. In response to strong opposition from agricultural, energy, and shipping sectors, US trade authorities have scaled back the fees and broadened exemptions.
The US Trade Representative’s office has yet to comment on these developments.
China’s Ministry of Commerce stated on Tuesday, “Should the US opt for confrontation, China is prepared to see it through; however, if dialogue is chosen, China’s door remains open.”
In a related escalation, Beijing imposed sanctions on five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, accusing them of aiding a US investigation into Chinese trade practices. Hanwha, a major global shipbuilder with operations including Philly Shipyard in the US and contracts for US Navy ship maintenance, also plans to construct a US-flagged LNG carrier.
Hanwha acknowledged the sanctions and is monitoring their potential impact, with its stock price dropping nearly 6 percent following the announcement.
China has also launched an inquiry into the repercussions of the US investigation on its maritime and shipbuilding industries.
A Shanghai-based trade expert, speaking anonymously, suggested that the new fees might not cause major disruptions. “Halting shipping isn’t an option. Despite existing trade challenges with the US, businesses are adapting,” the consultant remarked.
Last Friday, the US government announced a temporary exemption for long-term charterers of China-operated vessels transporting US ethane and liquefied petroleum gas (LPG), postponing the port fees until December 10.
Ship-monitoring firm Vortexa identified 45 very large gas carriers (VLGCs) carrying LPG that would be subject to China’s port fees, representing 11 percent of the global fleet.
Clarksons Research reported that China’s new port charges could impact oil tankers comprising 15 percent of worldwide capacity.
Financial analyst Omar Nokta from Jefferies estimated that 13 percent of crude oil tankers and 11 percent of container ships globally would be affected by these fees.
Trade Conflict Intersects with Environmental Policy
In retaliation for China’s restrictions on critical mineral exports, President Trump threatened last Friday to impose an additional 100 percent tariff on Chinese goods and introduce new export controls on “all critical software” by November 1.
Shortly thereafter, US officials warned that countries supporting a United Nations International Maritime Organization (IMO) initiative to reduce greenhouse gas emissions from ocean shipping could face sanctions, port restrictions, or punitive vessel charges. Notably, China has publicly endorsed the IMO’s environmental plan.
Athens-based Xclusiv Shipbrokers commented, “The use of trade and environmental policies as strategic tools indicates that shipping has evolved from a neutral facilitator of global trade into a direct instrument of geopolitical strategy.”
