By Lisa Baertlein, Andrea Shalal and Jonathan Saul
LOS ANGELES (Reuters) – The U.S. Trade Representative’s office will announce its plan on Thursday for levying port fees on China-linked ships as part of President Donald Trump’s effort to revive domestic shipbuilding and counter China’s dominance on the high seas.
April 17, the one-year anniversary of when USTR launched its investigation into China’s maritime activities, is the statutory deadline for the agency to finalize its remedies after concluding in January that China uses unfair policies and practices to dominate global shipping.
U.S. Trade Representative Jamieson Greer last week said the agency would not apply all aspects of its original fee proposal, which outlined a range of options to penalize China, including million-dollar port fees for ships with ties to China.
USTR had no immediate comment on the details of its plans.
The apparent revision followed a tsunami of public and private opposition from the global maritime industry, including domestic port and vessel operators as well as U.S. exporters and importers of everything from coal and corn to bananas and concrete.
During a congressional hearing Greer said the fees may not be cumulative and would be designed to avoid economic harm.
Reuters reported separately that the administration was considering a variety of options to soften the port fee proposal after receiving feedback from industry representatives in private meetings or via hundreds of comments submitted online.
Implementation could also come as late as November as a result of the feedback, three sources tracking the issue, who declined to be identified, told Reuters.
Industry executives had warned that U.S. taxpayers, workers and even the U.S. shipbuilders and owners the government aims to support could be harmed if the plan was adopted without adjustments, because nearly all of the existing global shipping fleet would be subject to the huge fees.
Small-to-medium ports, for example, said they are concerned that ships will stop calling on them if USTR assesses the fee at each U.S. port visit. Concentrating calls at larger ports would overwhelm those facilities, while starving secondary ports that have received billions of dollars of public investment in infrastructure improvements, port executives warned.
“The rule as currently drafted, particularly the fee imposed per port call, may have significant impact on the supply chain that could cause unintended consequences that harm U.S. ports and those who rely on the global supply chain,” said Scott Chadwick, Port of San Diego CEO, in a statement to Reuters.
That Southern California port is home to General Dynamics’ National Steel and Shipbuilding Co, which constructs and repairs vessels, as well as cargo carrier Pasha, which makes bi-weekly calls to Hawaii with its U.S.-built and flagged Jones Act ship named Jean Anne.
Chadwick did not elaborate on the fee impact, but fewer port calls at San Diego could translate to less ship repair activity for NASSCO and financial stress for terminal operators that serve Pasha and other customers.
General Dynamics and other U.S.-based military ship builders including Huntington Ingalls Industries have in-port or standalone facilities. They did not immediately comment.
The Shipbuilders Council of America, which represents the industry, said it supports Trump’s effort to restore and strengthen the United States’ shipbuilding and ship repair industry.
The proposed fees would undermine years of federal government investments in ports, including dredging projects, new cargo-handling equipment, and expanded cargo terminals, American Association of Port Authorities CEO Cary Davis said in a letter to USTR. He said that some of those investments were made during Trump’s first term.
“This proposal would risk turning many of these valuable investments that translate into thousands of jobs into stranded assets,” Davis wrote. AAPA declined further comment.
Representatives from the Northwest Seaport Alliance and the ports of Los Angeles, Long Beach and Seattle disclosed that they met with USTR officials prior to public hearings in late March to address issues of cargo diversions.
They were joined by the International Longshore and Warehouse Union that represents their longshore laborers and West Coast rail operators Union Pacific and Berkshire Hathaway-owned BNSF.
“This isn’t just about redirecting cargo – it’s about the infrastructure and systems that keep goods moving,” said Matt Leech, CEO of New Jersey-based Ports America, one of the largest U.S. port operators.
“You can’t expand capacity by building new rail lines or relocate an entire trucking workforce overnight.”
(Reporting by Lisa Baertlein in Los Angeles, Andrea Shalal in Washington and Jonathan Saul in London; Editing by Matthew Lewis)
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