USTR targets China’s maritime and shipbuilding tactics

Military warships are under construction at Ingalls Shipbuilding, a division of Huntington Ingalls Industries in Pascagoula, Miss. (Credit: Shutterstock/Carmen K. Sisson)

On April 17, the Office of the United States Trade Representative (USTR) took targeted action to restore American shipbuilding and address what it says are China’s “unreasonable acts, policies, and practices to dominate the maritime, logistics, and shipbuilding sectors.” These responsive actions come after a year-long Section 301 investigation, which included the USTR convening a two-day public hearing, receiving nearly 600 public comments, and consulting with government agency experts and USTR cleared advisors.

The USTR’s Section 301 action against China’s maritime, logistics, and shipbuilding sectors is closely aligned with the objectives of the SHIPS for America Act, which made headlines once again yesterday.

“Ships and shipping are vital to American economic security and the free flow of commerce,” said Ambassador Jamieson Greer. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

These actions, says the USTR, balance the need for action and the importance of limiting disruption for U.S. exporters. They will occur in two phases:

For the first 180 days the applicable fees will be set at $0.

(1) In the first phase, after 180 days:

• Fees on vessel owners and operators of China based on net tonnage per U.S. voyage, increasing incrementally over the following years;
• Fees on operators of Chinese-built ships based on net tonnage or containers, increasing incrementally over the following years; and
• To incentivize U.S.-built car carrier vessels, fees on foreign-built car carrier vessels based on their capacity.

(2) The second phase actions will not take place for three years:

• To incentivize U.S.-built liquefied natural gas (LNG) vessels, limited restrictions on transporting LNG via foreign vessels. These restrictions will increase incrementally over 22 years.

In addition, the USTR is seeking public comments on the proposed tariffs on ship-to-shore cranes and other cargo handling equipment, in line with the president’s Maritime Executive Order.

To view the Federal Register Notice, click here.

The deadline to submit a request to appear at the hearing is May 8, 2025.

Comments in response to this notice can be submitted or accessed here.

Background

Section 301 of the Trade Act of 1974, as amended (Trade Act), is designed to address “unfair foreign practices affecting U.S. commerce,” says the USTR. The Section 301 provisions of the Trade Act provide a domestic procedure through which interested persons may petition the U.S. Trade Representative 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 U.S. commerce.

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

• the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO CLC (USW);
• the International Association of Machinists and Aerospace Workers (IAM);
• the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO/CLC (IBB);
• the International Brotherhood of Electrical Workers (IBEW); and
• the Maritime Trades Department, AFL-CIO (MTD).

Pursuant to Section 302(a)(2) of the Trade Act, the U.S. Trade Representative reviewed the allegations in the petition and determined to initiate an investigation regarding the issues raised in the petition. On April 17, 2024, the USTR requested consultations with the government of China.

In light of the information obtained during the investigation and taking into account public comments, as well as the advice of the interagency Section 301 Committee and advisory committees, the USTR says it determined that China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable and burdens or restricts U.S. commerce and is therefore actionable under Sections 301(b) and 304(a) of the Trade Act.

“Specifically, the USTR found China’s targeting for dominance unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition and creates dependencies on China, increasing risk and reducing supply chain resilience,” the USTR says in a release from April 17. “China’s targeting for dominance is also unreasonable because of Beijing’s extraordinary control over its economic actors and these sectors.”

The USTR says it found that China’s targeting 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.

A copy of the petition and other public documents associated with this investigation are available here. USTR’s public report on the investigation is available here, and the U.S. Trade Representative’s determination is available here.