April, 2025 - USTR publishes Notice imposing fees on US port calls for certain non-US built ships

Following over a year of investigation and consultation, on 17th April, 2025 the US Trade Representative (“USTR”) published a Notice of Action and Proposed Action (the “USTR Notice”) under section 301 of the Trade Act of 1974 as amended (the “Trade Act”), implementing fees on US port calls for certain categories of non-US built ships.  In this article we consider the background to the USTR Notice, the key actions implemented and the implications for ship owners and operators.

Background

Section 301 of the Trade Act is designed to address unfair foreign practices affecting US commerce. The Section 301 provisions provide a domestic procedure through which interested persons may petition the USTR to investigate a foreign government act, policy, or practice and take appropriate action.  Section 301(b) may be used to respond to unreasonable or discriminatory foreign government acts, policies, and practices that burden or restrict US commerce.

On 12th March, 2024 five national labour unions filed a petition requesting an investigation into the acts, policies, and practices of China targeting the maritime, logistics, and shipbuilding sectors for dominance.

Pursuant to Section 302(a)(2) of the Trade Act, the USTR reviewed the allegations in the petition and determined to initiate an investigation regarding the issues raised in the petition.

In light of the information obtained during the investigation the USTR determined that China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable and burdens or restricts US commerce and is therefore actionable under Sections 301(b) and 304(a) of the Trade Act.

On 21st February, 2025 USTR issued a Federal Register Notice proposing certain responsive action, including service fees and restrictions on certain maritime transport services. By statute, the US Trade Representative had to determine what action to take by 17th April, 2025.

Following the Federal Register Notice there was much speculation as to the service fees which might be imposed on Chinese operated and built ships. For example, it was suggested that fees might be imposed on non-Chinese built ships which were part of a fleet which contained Chinese built ships, or ships on order at Chinese shipyards.  

However, the USTR Notice issued on  17th April, 2025 represented a significant dilution of the Actions proposed in the Federal Register notice (prior to the consultation process which took place thereafter).

Actions implemented

The USTR Notice implements a port fee mechanism by means of four non-cumulative “Annexes” As follows:

• Annex I – Fee on Chinese ship operators and ship owners
  From 14th October , 2025, a fee will be imposed on the entry of a Chinese-owned or operated ship into a US port at a rate of $50 per net ton. The rate will then increase  on an annual basis beginning in April, 2026 and plateauing at $140 per net ton in April, 2028.
  
  Notably “owner” and “operator” are defined by reference to US Customs and Border Protection (“CBP”) Form 1300. The instructions to the CBP Form state that the “operator” is defined as the party listed on the Certificate of Financial Responsibility (Water Pollution) unless another verifiable charter or lease arrangement indicates otherwise. The form does not include guidance as to who is the “owner.”
  
  “China” includes the People’s Republic of China, Hong Kong and Macau, although not Taiwan. A Chinese owner or operator generally includes, inter alia, an owner or operator that is a citizen of or headquartered in China, as well as an entity that is owned or controlled by a Chinese citizen.
   
• Annex II – Fee on Chinese-built ships
  From 14th October, 2025, a fee will be imposed on the entry of a Chinese-built ship into a US port at a rate of $18 per net ton. The rate will again increase on an annual basis beginning in April, 2026 and plateauing at $33 per net ton in April, 2028. In the case of container ships, an alternate rate will be imposed (if higher than the tonnage rate) calculated on the basis of containers discharged: starting at $120 per container and plateauing at $250 per container.
  
  There are several exceptions to the imposition of the fees, including for ships arriving to the US empty or in ballast, certain US-owned ships, ships entering the continental US from a voyage of less than 2,000 nautical miles, and certain specialised ships.
  
  Most importantly  perhaps, the fees under Annex II do not apply to ships with a capacity equal to or less than 4,000 Twenty Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons.
   
• Annex III – Fee on foreign-built vehicle carriers
  Again, from 14th October, 2025, a fee will be imposed on the entry of a non-US-built vehicle carrier into a US port at a rate of $150 per Car Equivalent Unit (CEU).
   
• Annex IV – Restriction on LNG exports
  From 17th April, , 2028, at least 1% of all LNG intended for exportation by ship in a calendar year must be exported by a US-built ship. This percentage increases annually, plateauing at 15% in April, 2047.

Operation and common provisions of Annexes

The fees and restrictions imposed by the Annexes are not cumulative. The order of operation of the Annexes is 1) Annex IV (LNG exports); 2) Annex III (non-US car carriers); 3) Annex I (Chinese owners/operators); and 4) Annex II (Chinese-built ships). So, for example, a Chinese-built ship that is subject to fees because it has a Chinese owner or operator will not also be subject to fees on Chinese-built ships.

The fees on Chinese-built ships and foreign-built vehicle carriers, and restrictions on LNG exports, will be suspended for up to three years if the ship owner orders and takes delivery of a US-built ship of equivalent or greater capacity. This suspension does not apply to Chinese-owned or leased ships.

The fees on Chinese-owned or operated ships and Chinese-built ships are imposed up to five times per ship per year. This limitation does not apply to the fees on foreign-built vehicle carriers.

The fees on Chinese-owned or operated ships and Chinese-built ships are assessed for each string of US voyages (so that a voyage that involves deliveries at multiple US ports of call in a row would trigger only a single fee). Again, this rule does not apply to the fees on foreign-built vehicle carriers.

The proposed service fee charged on non-Chinese built ships which are part of a fleet containing Chinese built ships, or ships on order at a Chinese shipyard, which was proposed in the Federal Register Notice in February, 2025, has not been implemented.

Commentary

Some concern has been expressed in the industry as to whether “operator” under Annex I might include a Chinese charterer (or indeed a Chinese sub-charterer). This is probably not the intention but who is to be regarded as the ”operator” is to be assessed by reference to the Vessel Entrance or Clearance Statement in CBP Form 1300. Having made enquiries this would seem commonly be  the owner or manager, and not commonly the charterer, though the position may vary from state to state.

Questions may arise however in respect of  a bareboat charterer, which may well be regarded as the operator by the US Customs authorities. Fees under Annex I are payable on or before entry of a ship at the first US Port, so it would be an obligation of the time charterer if it was for these purposes regarded as the operator.  

Insofar as the fees are incurred by the ship owner by reason of a laden Chinese built ship (of the applicable size) arriving at a US Port, this raises the question of whether such fees would be recoverable from the ship’s time charterer whether as a port charge (which are usually for the charterer’s account) or by way of an implied indemnity.

There is little case law on the meaning of “port charges” but some commentators have already suggested that the service fees would fall into that category. It may require a test case to resolve the issue. Recovery by way of implied indemnity is more problematic (since the fees will have been proximately caused by the place of build of the ship, rather than the charterer’s employment orders) but for new charters any charterer would be aware on fixing of the ship’s place of build and thus that fees will be incurred in respect of a US port call with a laden ship (perhaps increasing the prospects of recovery by way of implied indemnity). Finally the fees may fall within a widely drawn taxes clause which sometimes refer to “fees” or “levies”.

Given the nature and width of the service fees, there are inevitably going to be enquiries into the operation of the Actions and Proposed Actions (on which US law advice will likely be required) and possibly disputes as to who (ultimately) is responsible for the fees which are paid. The Club will continue to monitor the position and update Members as necessary.

If Members have any questions in relation to the above issues they are invited to contact the Club for further information.