Farm leaders are signaling alarm over a proposal from the Office of the U.S. Trade Representative to charge a series of fees on ships with Chinese connections, including a fee up to $1 million on Chinese vessel operators each time a ship enters U.S. ports.
The proposed fees are in connection with President Trump’s pledge to rebuild the U.S. shipbuilding industry and complaints from the U.S. shipbuilding industry.
In a request for public comment on a Section 301 investigation, USTR said, “For nearly three decades, China has targeted the maritime, logistics, and shipbuilding sectors for dominance and has employed increasingly aggressive and specific targets in pursuing dominance.”
The comments are due by Monday, the same day that USTR has scheduled a hearing in the main hearing room of the U.S. International Trade Commission, 500 E St. SW, beginning at 10 a.m.
The American Farm Bureau Federation’s Market Intel service released a study today in which it said “these proposals may unintentionally — and disproportionally — penalize U.S. farmers and ranchers who rely on affordable and efficient shipping. Over 21% of all vessels calling at U.S. ports in 2024 were Chinese-built, meaning a substantial share of vessels transporting U.S. goods — including agricultural products — could be subject to these fees.”
Farm Bureau concluded, “Addressing China’s dominance in global shipbuilding and logistics is an important policy goal, particularly given supply chain vulnerabilities and national security concerns. However, imposing fees on Chinese-built and -operated vessels could impose significant near-term costs on U.S. agriculture, and U.S.-built shipping requirements could strangle trade down the road.”
American Farm Bureau Federation President Zippy Duvall added in a news release, “Farmers support the goals of creating a level playing field for trade and strengthening the nation’s supply chain. Unfortunately, farmers may feel the brunt of increased costs in exporting their goods. They’ve lost money on almost all major crops for the past three years. Higher freight rates could make things even worse by reducing their competitiveness overseas.”
During a discussion of trade at the Agri-Pulse summit on Monday, Jim Sutter, CEO of the U.S. Soybean Export Council, said the fee “would hurt the competitiveness of U.S. agricultural products.”
Sutter said the fee could raise the cost of U.S. soybeans by as much as 50 cents per bushel. The price of U.S. soybeans is currently low, and farmers want foreigners to buy the soybeans at these prices, Sutter added.
Everett Eissenstat, a former U.S. trade official who is a partner at Squire Patton Boggs, said that the fees might lead shippers to avoid U.S. ports.
Alexis Taylor, the Agriculture undersecretary for trade and foreign agricultural affairs in the Biden administration who is now chief global policy officer for the International Fresh Produce Association, noted that her organization is concerned with the importation of products, especially those fruits and vegetables the United States does not grow. Americans, she noted, are not eating enough fruits and vegetables to fulfill the recommended five servings a day of those foods.
International Dairy Foods Association President and CEO Michael Dykes pointed out that the United States had seen “a taste” of the problem of “opportunity costs” during the COVID pandemic, when ships had trouble getting into ports and frequently dropped off Asian goods and turned around quickly without loading U.S. agricultural products.
IDFA Executive Vice President Matt Herrick added in an email today, “We share the goal expressed by the administration’s leadership to strengthen America’s national security and greatly improve our overall competitiveness in ocean shipping capacity with more U.S.-made vessels.
Steel tariffs that constrain steel supply, on a shipbuilding industry that is at capacity, combined with financial penalties for exporters not using U.S. ships, however, are very likely to exacerbate the policy problems at hand. We strongly encourage the administration to engage in constructive discussion on solutions that will bolster the U.S. shipbuilding sector in a manner that avoids any negative impact or other unintended consequences on U.S. ag and dairy exporters already facing many headwinds.”
USTR began an investigation into the Chinese shipping industry in 2024 under Section 301 of the 1974 Trade Act, which authorizes USTR to impose tariffs or other import restrictions on foreign products after determining that “an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce.”
USTR initiated the investigation in response to a petition from business and labor groups that said, “The American commercial shipbuilding industry is a shell of its former self. After World War II, the United States led the world in commercial shipbuilding. In 1975, the industry had more than 70 commercial ships on order, employed 180,000 workers, and ranked No. 1 in terms of shipbuilding capacity.
Nearly 50 years later, the number of commercial shipyards in the United States has plunged by more than 70%, tens of thousands of jobs have been lost, and the United States now produces only a fraction of 1% of the world’s commercial vessels, falling to 19th place. The biggest obstacle to the industry’s recovery is the unfair trade practices of the world’s largest shipbuilding nation: China.”
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