Written by: Lisa Baertlein, Liz Lee and Joe Cash
BEIJING/LOS ANGELES (Reuters) – The United States and China on Tuesday began charging additional port fees to ocean carriers carrying 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.
Last week, a return to an all-out trade war appeared imminent after China announced a major expansion of rare earth export controls and 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 by emphasizing cooperation between their negotiating teams and the possibility that they could find a way forward.
China said it had started collecting special duties on US-owned, operated, built or flagged ships, but announced that Chinese-built ships would be exempt from the duty.
In details published by state broadcaster CCTV, China outlined specific provisions for exemptions that include empty ships entering Chinese shipyards for repairs.
Similar to the US plan, the new fees imposed by China will be collected at the first port of entry on a single trip or for the first five trips within a year.
“This tit-for-tat symmetry locks both economies in a maritime duty spiral that risks disrupting global cargo flows,” Athens-based Xclusiv Shipbrokers said in a research note. he said.
Earlier this year, the Trump administration announced plans to charge Chinese-linked ships to loosen the country’s grip on the global shipping industry and support U.S. shipbuilding.
An investigation conducted during the former Biden administration concluded that China used unfair policies and practices to dominate the global shipping, logistics and shipbuilding industries, paving the way for these penalties.
China responded last week by saying it would impose its own port fees on US-bound ships from the day the US fees go into effect.
“We are in an intense phase of the disruption where everyone is quietly trying to find workarounds, with varying degrees of success,” said Ed Finley-Richardson, an independent dry bulk transportation analyst. He said he had heard reports that U.S. shipowners with non-Chinese ships were trying to sell their cargo to other countries while en route so the ships could be diverted. Reuters could not immediately confirm this.
Analysts expect Chinese-owned container carrier COSCO to be hit hardest by U.S. fees, with that segment bearing nearly half of the $3.2 billion in costs expected from those fees in 2026.
Major container lines including Maersk, Hapag-Lloyd and CMA CGM have reduced their exposure by removing China-bound ships from US shipping routes. Trade officials there cut the fees from initially proposed levels and exempted a broad group of ships after heavy backlash from the agriculture, energy and U.S. shipping industries.
USTR did not immediately respond to a request for comment.
“If the US chooses conflict, China will do it to the end; if it chooses dialogue, China’s door will remain open,” China’s Ministry of Commerce said in a statement on Tuesday. he said.
In a related move, Beijing also imposed sanctions on Tuesday against five US subsidiaries of South Korean shipbuilder Hanwha Ocean; He said these companies “assisted and supported” the U.S. investigation into China’s business practices.
Hanwha, one of the world’s largest shipbuilders, owns the Philly Shipyard in the US and has won contracts for the repair and overhaul of US Navy ships. Their organization will also build a US-flagged LNG carrier.
Hanwha said it was aware of the announcement and was closely monitoring its potential business impact. Hanwha Ocean’s shares lost nearly 6%.
China has also launched an investigation into how the US investigation affects the shipping and shipbuilding industries.
SHIPPING LINES ARE MIXING FOR WORKAROUND SOLUTIONS
A Shanghai-based trade consultant said the new fees may not cause significant confusion.
“What do we do? Stop the shipping? Trade with the US is already pretty broken, but companies are finding a way,” said the adviser, who asked to remain anonymous because he was not authorized to speak to the media.
Last Friday, the United States announced that it had made an allocation for long-term charterers of Chinese-operated ships carrying US ethane and LPG and postponed port fees for these ships until December 10.
Meanwhile, ship tracking company Vortexa has identified 45 LPG-carrying VLGCs (11% of the total fleet) that will be subject to China’s port charge.
Clarksons Research said in a report that China’s new port charges could impact oil tankers, which account for 15% of global capacity. Jefferies analyst Omar Nokta estimated that 13% of crude tankers and 11% of container ships in the global fleet would be affected.
TRADE WAR EXTENDS TO ENVIRONMENTAL POLICY
In retaliation for China restricting exports of critical minerals, Trump on Friday threatened to impose 100% additional tariffs on goods from China and impose new export controls on “any critical software” by Nov. 1.
Administration officials warned hours later that countries that vote in favor of the U.N. International Maritime Organization’s plan this week to reduce planet-warming greenhouse gas emissions from ocean shipping could face sanctions, port bans or criminal penalties on ships. China openly supported the IMO plan.
“The weaponization of both trade and environmental policy signals the transformation of shipping from a neutral channel of global trade into a direct tool of statecraft,” Xclusiv said.
Shares of Shanghai-listed COSCO rose more than 2% in early trading Tuesday. The company said its board of directors approved a plan to buy back shares worth 1.5 billion yuan ($210.3 million) over the next three months to preserve corporate value and protect shareholder interests.
The shipping company did not immediately respond to Reuters questions about port charges.
($1 = 7.1337 Chinese yuan)
(Reporting by Lisa Baertlein in Los Angeles, Arathy Somasekhar and Georgina McCartney in Houston, Liz Lee, Joe Cash and Sam Li in Beijing and Heejin Kim in Seoul; Additional reporting by Samuel Shen and Brenda Goh in Shanghai and James Pomfret in Hong Kong; Editing by Stephen Coates, Kim Coghill and Lisa Shumaker)
