By Dilara Zengin and Emir Yildirim
WASHINGTON (AA) - US President Donald Trump’s plan to apply port fees on Chinese-built or Chinese-flagged vessels docking at American ports risks pushing costs upwards in maritime trade.
Maritime transportation has become a new target in Trump’s efforts to boost US competitiveness in the shipbuilding and maritime sectors against China, according to a draft executive order.
The US Trade Representative, a government agency responsible for foreign trade policies, will impose tonnage-based fees on Chinese-built or flagged vessels that dock in US ports.
These fees will also apply to port cargo-handling equipment made in or assembled using components from China or produced by companies affiliated with China in any way.
The draft order specifies that a company owned or managed by a Chinese individual also falls under the category, even if the equipment in question were to be produced in a country other than China.
It also states that port fees will apply to fleets if any part of the fleet includes a Chinese-made or Chinese-flagged vessel calling at US ports.
While the order does not specify the exact fee amounts, the US Trade Representative estimates that fees could reach $1.5 million for such ships.
- China holds over 50% of shipbuilding market share
Chinese-made vessels account for over 50% of the global shipbuilding market, according to a US Trade Representative investigation launched last year. China's share in the sector was less than 5% in 1999.
The order, if issued, could lead to skyrocketing costs for large container carriers.
Peter Sand, chief analyst at freight market analysis firm Xeneta, told Anadolu that the Trump administration’s plan could cause “major congestion and delays in the US.” However, ocean container carriers “will take action to avoid the fees, such as calling at fewer ports.”
“If we include all ship types, 23% of the global fleet is built in China, 39% of all container ships are built in China,” he noted.
Sand suggested that major shippers can adapt to these changes by “setting up a ‘Special Purpose company’ that would service the US.”
“A company that would be without an orderbook and only deploy non-Chinese-built ships on the services,” he said. “The less extreme (option) would be to call fewer ports in the US to limit the total fees being paid, all done by non-Chinese-built ships.”
Sand emphasized that the rising costs derived from this order would be passed on to the importer and the end consumer, “depending on the profit margin of the goods imported and the ability of the importer to absorb such a high increase in landed cost.”
“It will be a tax on trade -- something that has a negative impact on demand -- as the purchasing power of customers will go down,” he added.
- ‘Unprecedented uncertainty is not good for business’
Sand stated that import shippers “dealt with the first trade war from 2018-19” by creating new trade routes to bring goods to the US via Canada and Mexico.
“Right now, they are paralyzed and in limbo, as they don't know how to deal with the obstacles, as they change all the time,” he said. “Unprecedented uncertainty is not good for business.”
“US inflation has gone up for a few months already -- this is probably getting worse,” he added.