The US and China on Tuesday began charging additional port fees on ocean shipping firms that move everything from holiday toys to crude oil, making the high seas a key front in the trade war between the world’s two largest economies, the US and China.
A return to an all-out trade war appeared imminent last week, after China announced a major expansion of its rare earths export controls and US President Donald Trump threatened to raise tariffs on Chinese goods to triple-digits.
But after the weekend, both sides sought to reassure traders and investors, highlighting cooperation between their negotiating teams and the possibility they could find a way forward
China said it had started to collect the special charges on U.S.-owned, operated, built, or flagged vessels but clarified that Chinese-built ships would be exempted from the levies.
Read Also: China says will ‘fight to the end’ in US trade war
In details published by state broadcaster CCTV, China spelled out specific provisions on exemptions, which also include empty ships entering Chinese shipyards for repair.
The China-imposed extra port fees would be collected at the first port of entry on a single voyage or for the first five voyages within a year, following an annual billing cycle beginning on April 17.
Early this year, U.S. President Donald Trump’s administration announced plans to levy the fees on China-linked ships to loosen the country’s grip on the global maritime industry and bolster U.S. shipbuilding.
An investigation during former President Joe Biden’s administration concluded China uses unfair policies and practices to dominate the global maritime, logistics and shipbuilding sectors, clearing the way for those penalties.
China hit back last week, saying it would impose its own port fees on U.S.-linked vessels from the same day the U.S. fees took effect.
Analysts expect China-owned container carrier to be most affected, shouldering nearly half of that segment’s expected $3.2 billion cost from those fees in 2026.
Its commerce ministry on Tuesday urged the U.S. to “rectify its erroneous practices”, and pursue dialogue and consultation instead.
“If the U.S. chooses confrontation, China will see it through to the end; if it chooses dialogue, China’s door remains open,” it said.
In a related move, Beijing also imposed sanctions on Tuesday against five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean which it said had “assisted and supported” a U.S. probe into Chinese trade practices.
Hanwha said in a message to Reuters it is aware of the announcement and is closely reviewing the potential business impact on the company. Hanwha Ocean’s shares (042660.KS), opens new tab sank nearly 6%.
China also launched an investigation into how the U.S. probe affected its shipping and shipbuilding industries.
FREIGHT FRIGHT
“This tit-for-tat symmetry locks both economies into a spiral of maritime taxation that risks distorting global freight flows,” Athens-based Xclusiv Shipbrokers Inc said in a research note.
A Shanghai-based consultant who advises global companies on trade with China said the new fees may not be very disruptive to the industry and any rising costs probably would be captured in higher prices.
“What are we going to do? Stop shipping? Trade is already pretty disrupted with the U.S., but companies are finding a way,” the consultant said, asking to remain anonymous as he was not authorised to speak with the media.
The U.S. announced last Friday a carve-out for long-term charterers of China-operated vessels carrying U.S. ethane and LPG, deferring the port fees for them through December 10.
But ship-tracking company Vortexa identified 45 LPG-carrying VLGCs – 11 percent of the total fleet – that would still be subject to China’s port fee, its Americas analyst Samantha Hartke said.
Clarksons Research said in a report that the new port fees could affect oil tankers accounting for 15 percent of global capacity. Jefferies analyst Omar Nokta estimated that 13% of crude tankers and 11 percent of container ships in the global fleet would be affected.
RETALIATION
In a reprisal against China curbing exports of critical minerals, Trump on Friday threatened to slap additional 100% tariffs on goods from China and put new export controls on “any and all critical software” by November 1.
Administration officials hours later warned that countries voting in favor of a plan by the United Nations’ International Maritime Organization to reduce planet-warming greenhouse gas emissions from ocean shipping this week could face sanctions, port bans, or punitive vessel charges. China has publicly supported the IMO plan.
“The weaponisation of both trade and environmental policy signals that shipping has moved from being a neutral conduit of global commerce to a direct instrument of statecraft,” Xclusiv said.
Shares in Shanghai-listed COSCO rose more than 2 percent in early trading on Tuesday. The company said its board had approved a plan to buy back up to 1.5 billion yuan ($210.3 million) worth of its shares within the next three months to maintain corporate value and safeguard shareholder interest.
The shipping firm did not immediately respond to Reuters’ queries about the port fees.