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The USTR issued a determination and report in January 2025 finding that China’s acts, policies, and practices of in the maritime, logistics, and shipbuilding sectors burden or restrict U.S. commerce and are actionable under Section 301 of the Trade Act of 1974.

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The USTR is proposing actions that could include significant port service fees and restrictions on services to promote the transport of U.S. goods on U.S. vessels.

If implemented, such actions would likely lead to higher shipping costs and trigger supply chain disruptions.

Public comments on the proposed actions will be accepted until March 24, 2025.

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On February 21, 2025, the Office of the U.S. Trade Representative (USTR) <a href="https://ustr.gov/sites/default/files/files/Press/Releases/2025/Ships%20Proposed%20Action%20FRN.pdf">announced</a> its proposed actions in response to an earlier determination finding China was targeting the maritime, logistics, and shipbuilding sectors for dominance. This determination followed an investigation under Section 301 of the Trade Act of 1974. This bulletin summarizes the investigation and highlights the proposed actions the USTR is considering submitting to President Donald Trump. In sum, the proposed actions could involve:

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Charging varying and significant U.S. port service fees on Chinese maritime transport operators, as well as other maritime transport operators with fleets comprised of Chinese-built vessels.

Restrictions on services to promote the transport of U.S. goods on U.S. vessels, including annual increasing requirements that a percentage of exports of U.S. products be shipped on U.S.-flagged vessels by U.S. operators.

Potential actions to restrict the use of the Chinese-promoted National Transportation and Logistics Public Information Platform (LOGINK).

The USTR has also indicated that it may consider entering into negotiations with allies and partners to counteract China’s acts, policies, and practices and to reduce dependencies on China in the maritime, logistics, and shipbuilding sectors.

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These potential actions will likely lead to higher shipping costs for U.S. importers and exporters if the fees are passed through to the purchasers of ocean transportation services or if vessel capacity is reduced for the U.S. trades. The proposal could also trigger supply chain disruptions to the extent that impacted vessel operators may reduce or eliminate certain ports of call in the United States to avoid the fees. If there are fewer U.S. ports where the economics support continuing vessel services, this could lead to port congestion, shipping delays, and higher costs.

On March 12, 2024, five national labor unions filed a <a href="https://ustr.gov/sites/default/files/Section 301 Petition - Maritime Logisitics and Shipbuilding Sector.pdf">petition</a> with the Office of the U.S. Trade Representative (USTR) under Section 301 of the Trade Act of 1974 requesting an investigation into the acts, policies, and practices of China in the maritime, logistics, and shipbuilding sectors. Section 301 allows the United States to respond to unreasonable or discriminatory foreign government practices that burden or restrict U.S. commerce. Arguing that the “American commercial shipbuilding industry is a shell of its former self,” the petition stated that the number of commercial shipyards in the United States had significantly decreased, jobs had been lost, and U.S. production amounted to only a fraction of one percent of the world’s commercial vessels. The petition alleged that China, as the world’s largest shipbuilding nation, has “seized market share, suppressed prices, and created a worldwide network of ports and logistics infrastructure that threaten to discriminate against U.S. ships and shipping companies, disrupt supply chains, and undermine vital national security interests.”

In April 2024, the USTR initiated the investigation with then-Ambassador Katherine Tai stating that the allegations “reflect what we have already seen across other sectors, where the PRC [China] utilizes a wide range of non-market policies and practices to undermine fair competition and dominate the market, both in China and globally.”

On January 16, 2025, as the Biden administration was winding down, the USTR released its report and findings in the investigation, concluding that China’s targeted dominance in these maritime sectors is unreasonable and burdens or restricts U.S. commerce, and is thus “actionable” under Section 301. Federal Register <a href="https://www.ustr.gov/sites/default/files/enforcement/301Investigations/FRNActionabilityChinaTargetingMaritime.pdf">Notice of Determination</a> notes that the investigation determined:

China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable because: it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition; and it creates dependencies on China, increasing risk and reducing supply chain resilience. China’s targeting for dominance is also unreasonable because of its extraordinary control over its economic actors and these sectors.

China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.

The determination is accompanied by a comprehensive report, which is available <a href="https://www.ustr.gov/sites/default/files/enforcement/301Investigations/USTRReportChinaTargetingMaritime.pdf">here</a>. The findings of the report indicate that China has targeted the maritime, logistics, and shipbuilding sectors for three decades via its “top-down industrial planning” system, “a critical feature of China’s state-led, non-market econom[y].” Through its five-year economic plans, China targeted this industry and initiated policies that unfairly depressed costs or provided advantages. For example, the reports indicate that enterprises in the Chinese shipbuilding supply chain benefit from (i) China’s lack of effective labor rights and the use of forced or compulsory labor; (ii) China’s non-market excess capacity in inputs, such as steel, advantage downstream Chinese enterprises; (iii) setting product targets for shipbuilding, marine equipment, and high-technology ships; and (iv) setting targets for production, domestic content, and domestic and international market shares.

As a result, the USTR determined the following:

China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition.

China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance creates dependencies on China, increasing risk and reducing supply chain resilience.

China’s targeting of the maritime, logistics, and shipbuilding sectors is unreasonable because of China’s extraordinary control over its economic actors and these sectors.

While the determination found that China’s behavior burdens or restricts U.S. commerce and is actionable, thus allowing the United States to respond, the Biden administration deferred any retaliatory actions to the incoming Trump administration.

For additional background details, see Thompson Hine Updates of <a href="https://www.thompsonhinesmartrade.com/2024/03/section-301-petition-filed-at-ustr-on-chinas-policies-in-the-maritime-logistics-and-shipbuilding-sector/">March 13, 2024</a>, <a href="https://www.thompsonhinesmartrade.com/2024/04/ustr-initiates-section-301-investigation-targeting-chinas-maritime-logistics-and-shipbuilding-sectors/">April 17, 2024</a>, and <a href="https://www.thompsonhinesmartrade.com/2025/01/ustr-releases-determination-finding-that-chinas-targeting-of-the-maritime-logistics-and-shipbuilding-sectors-for-dominance-is-actionable-under-section-301/">January 17, 2025</a>.

To “create leverage” and eliminate China’s targeting of these sectors, on February 21, 2025, the USTR proposed actions against certain services of China. Under Section 301, the USTR may take action against any good or economic sector on a non-discriminatory basis or target measures solely at the foreign country in question. The proposed action may include one or more of the following options:

Service Fee on Chinese Maritime Transport Operators: A vessel operator of China to be charged a fee on the international maritime transport being provided (a) at a rate of up to $1,000,000 per entrance of any vessel of that operator to a U.S. port; or (b) per entrance of any vessel of that operator to a U.S. port, at a rate of up to $1,000 per net ton of the vessel’s capacity.

Service Fee on Maritime Transport Operators with Fleets Comprised of Chinese-Built Vessels: Upon the entrance of a Chinese-built vessel to a U.S. port, a fee to be charged to that vessel’s operator on the international maritime transport provided via that vessel (a) at a rate of up to $1,500,000; (b) based on the percentage of Chinese-built vessels in that operator’s fleet: for operators with 50 percent or greater of their fleet comprised of Chinese-built vessels, the operator will be charged up to $1,000,000 per vessel entrance to a U.S. port; for operators with greater than 25 percent and less than 50 percent of their fleet comprised of Chinese-built vessels, the operator will be charged a fee up to $750,000 per vessel entrance to a U.S. port; for operators with greater than zero percent and less than 25 percent of their fleet comprised of Chinese-built vessels, the operator will be charged a fee up to $500,000 per vessel entrance to a U.S. port; or (c) based on the percentage of Chinese-built vessels in an operator’s fleet: an additional fee of up to $1,000,000 will be charged to a vessel operator per vessel entrance to a U.S. port if the number of Chinese-built vessels in the operator’s fleet is equal to or greater than 25 percent.

Service Fee on Maritime Transport Operators with Prospective Orders for Chinese Vessels: An additional fee based on the percentage of vessels ordered from Chinese shipyards: (a) for operators with 50 percent or greater of their vessel orders in Chinese shipyards or vessels expected to be delivered by Chinese shipyards over the next 24 months, the operator will be charged up to $1,000,000 per vessel entrance to a U.S. port; for operators with greater than 25 percent and less than 50 percent of their vessel orders in Chinese shipyards or expected to be delivered by Chinese shipyards over the next 24 months, the operator will be charged up to $750,000 per vessel entrance to a U.S. port; for operators with greater than zero percent and less than 25 percent of their vessel orders in Chinese shipyards or expected to be delivered by Chinese shipyards over the next 24 months, the operator will be charged up to $500,000 per vessel entrance to a U.S. port; or (b) a fee of up to $1,000,000 per vessel entrance to a U.S. port will be charged to a vessel operator if 25 percent or more of the total number of vessels ordered by that operator, or expected to be delivered to that operator, are ordered or expected to be delivered by Chinese shipyards over the next 24 months.

The USTR does provide, however, that these service fees may be refunded, on a calendar year basis, in an amount up to $1,000,000 per entry into a U.S. port of a U.S.-built vessel through which the operator is providing international maritime transport services.

Restrictions on Services to Promote the Transport of U.S. Goods on U.S. Vessels

The international maritime transport of all U.S. goods, such as capital goods, consumer goods, agricultural products, and chemical, petroleum, or gas products, must comply with the following schedule:

Effective on the date of implementing any action, at least 1 percent of U.S. products exported by vessel per calendar year must be transported on U.S.-flagged vessels operated by U.S. companies.

Effective 2 years after the date of any action, at least 3 percent of U.S. products exported by vessel per calendar year must be transported on U.S.-flagged vessels operated by U.S. companies.

Effective 3 years after the date of action, at least 5 percent of U.S. goods exported by vessel per calendar year must be transported on U.S.-flagged vessels operated by U.S. companies, with at least 3 percent on U.S.-flagged, U.S.-built vessels.

Effective 7 years after the date of action, at least 15 percent of U.S. goods exported by vessel per calendar year must be transported on U.S.-flagged vessels operated by U.S. companies with at least 5 percent on U.S.-flagged, U.S.-built vessels.

The international maritime transport of U.S. goods must comply with the following restrictions:

U.S. goods must be exported on U.S.-flagged, U.S.-built vessels. However, export on a non-U.S.-built vessel is permitted if the operator providing international maritime transport services demonstrates that at least 20 percent of the U.S. products they transport annually by vessel will be carried on U.S.-flagged, U.S.-built ships.

Reduced Exposure to China’s LOGINK or Other Similar Platforms

Another proposed action by the USTR would be to reduce exposure to and risks from China’s promotion of the National Transportation and Logistics Public Information Platform (LOGINK) or other similar platforms. This could include recommending that relevant U.S. agencies investigate alleged anticompetitive practices from Chinese shipping companies, restricting LOGINK access to U.S. shipping data, or banning or continuing to ban terminals at U.S. ports and U.S. ports from using LOGINK software.

The USTR has indicated that any of the above-proposed fees, charges, or restrictions that may eventually be imposed would be cumulative and additional to other existing or proposed fees, charges, or restrictions.

Request for Public Comments and Scheduled Public Hearing

The USTR is requesting public comments from interested parties regarding these proposed actions. Any comments must be submitted no later than March 24, 2025, via the USTR’s electronic portal: <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>. The docket number for written and rebuttal comments is USTR–2025–0002. The USTR is particularly interested in comments on the following:

The extent of the burden or restriction on U.S. commerce resulting from China’s efforts to dominate the maritime, logistics, and shipbuilding sectors.

The appropriate scope of responsive actions, including the type and level of trade measures.

The suitability of proposed fees or service restrictions, including which services should be subject to them, the appropriate fee or restriction levels, and the structure of any fees, restrictions, or reimbursement mechanisms.

The USTR requests commenters to specifically address whether a proposed action would be practicable and effective in eliminating China’s acts, policies, and practices.

The USTR will hold a public hearing on the proposed action in this investigation in the main hearing room of the U.S. International Trade Commission, 500 E Street S.W., Washington DC 20436, on March 24, 2025. Requests to appear at the hearing must be submitted by March 10, 2025, via the USTR portal under docket number USTR–2025–0003. Requests should include a summary of testimony and may be accompanied by a pre-hearing submission. Remarks at the hearing are limited to five minutes.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions.

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USTR Proposes Actions Against China’s Unfair Trade Practices in Maritime, Logistics, and Shipbuilding Sectors

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