Biden-era investigation fuels Trump’s latest China trade crackdown - Trade Treasury Payments

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Biden-era investigation fuels Trump’s latest China trade crackdown

The US Trade Representative (USTR) has unveiled a proposal to impose steep fees on Chinese-built and operated vessels calling at American ports, marking the latest escalation in trade tensions between Washington and Beijing. 

The move aims to counter China’s increasing control over global shipbuilding and logistics, but industry experts warn that the policy could drive up shipping costs and disrupt supply chains. The plan is open for public comment and could take effect later this year.

Background and context

The proposed measures stem from an investigation initiated under the Biden administration in response to concerns from labour unions and policymakers about China’s strategic push into the maritime, logistics, and shipbuilding sectors. 

According to USTR findings, China has used state-backed industrial policies to dominate global shipbuilding, growing its market share from 5% in 1999 to over 50% today.

This dominance has raised economic security concerns, as China controls nearly 95% of the world’s shipping container production and 86% of intermodal chassis manufacturing, key components of global trade. 

The USTR’s report argues that China’s policies have displaced foreign competitors, limited market access, and created dependencies that pose risks to US supply chains and the American economy.

Details of the proposed action

Under the USTR’s proposal, Chinese-built ships and operators with significant ties to Chinese shipyards would face substantial new fees, including:

• Up to $1.5 million per entry for Chinese-built vessels docking at US ports,
• Fees charged to operators with Chinese-built ships in their fleet or outstanding orders from Chinese shipyards,
• A mandate that US exports be transported on US-flagged vessels, with a phased requirement that at least 15% of exports move on US-built and flagged ships within seven years.

While the plan is designed to reduce reliance on China, encourage investment in US shipbuilding, and strengthen maritime supply chain resilience, industry insiders caution that the aggressive timeline for increasing US-built vessel requirements far exceeds domestic shipyard capacity.

Potential economic and trade impact

Industry analysts warn that these new fees could significantly increase shipping costs, as operators would likely pass on the added expenses to importers and consumers. 

According to estimates, the shipping costs of a standard 40-foot container (FEU) from China to Los Angeles could rise by $300, pushing rates above $3,300 per FEU.

The impact on US energy exports could be similarly severe. A very large crude carrier (VLCC) shipping oil from the US Gulf Coast to China would see transport costs rise from $4.20 per barrel to nearly $5.00, making US crude less competitive internationally.

Some industry experts believe the move could backfire by driving more trade through Canada and Mexico, with importers rerouting cargo to avoid US ports, congesting alternative gateways and weakening the intended economic pressure on China.

Political and strategic implications

The USTR’s proposal aligns with the Trump Administration’s broader ‘America First’ trade policy, which aims to boost domestic industries while reducing foreign dependencies. 

While many of Trumps trade moves, such as his call for 25% tariffs on Canada and Mexico, are widely criticised, attempts at curtailing China’s economic rise do largely have bipartisan support. Policymakers across the aisle have voiced concerns about China’s growing dominance in strategic sectors.

However, critics argue that the plan fails to address the reality of US shipbuilding capacity. Over the past few decades, American maritime production capacity has declined due to high costs and competition from state-backed Chinese, South Korean, and Japanese shipyards. 

Creating the capacity to build a modern commercial fleet could take years and require billions in investment, which has raised questions about the feasibility of meeting the proposed export targets.

Some experts also fear potential Chinese retaliation. These could include countermeasures against US agricultural exports, targeted restrictions on American companies operating in China, or any number of other measures that Beijing could put in place.

Such a response would be likely to exacerbate tensions between the world’s two largest economies and further strain global trade.

Industry reactions and next steps

Industry leaders have received mixed reactions to the proposal. Some applaud efforts to revitalise US shipbuilding, while others warn of economic fallout.

Shipping industry executives argue that the new fees will increase operational costs and force carriers to reconsider US routes. Since it is not uncommon for vessels to call at multiple stateside ports on a single voyage, the suggested fees could render some voyages economically infeasible, potentially shifting trade flows towards less costly alternatives. Prices for American consumers are also likely to rise as importers pass along the added costs. 

Meanwhile, labour unions and domestic shipbuilders have welcomed the proposal, seeing it as an opportunity to rebuild the US maritime sector and create high-paying jobs. Major unions, including the United Steelworkers and the International Brotherhood of Boilermakers, also argue that American industry and national security have been undercut by China’s dominance over shipping. They advocate for stronger trade protections to help protect America’s longterm interests.

The USTR has opened a public comment period until 24 March 2025 and will hold a public hearing on the proposal later that month. After reviewing industry feedback, the administration will determine whether to finalise, modify, or scrap the plan.