Good News for Shipping After US-China Summit, Including Suspension of Fees

Officials from both the United States and China are speaking positively of the results of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea on Thursday, October 30. The shipping industry is breathing a sigh of relief as reports indicate the reciprocal fees imposed after the USTR Section 301 investigation will be suspended and that China will be making large purchases from the U.S.

“Economic and trade relations should continue to be the ballast and engine of China-U.S. relations, not a stumbling block or point of conflict,” China’s Ministry of Commerce said in its statement at the conclusion of the summit. They said that the two countries have “good prospects for cooperation,” citing areas such as combating illegal immigration and telecom fraud, anti-money laundering, artificial intelligence, and responding to infectious diseases. China referenced a continuing dialogue between the countries was noting that “Xi Jinping pointed out that the economic and trade teams of the two countries exchanged in-depth views on important economic and trade issues and reached a consensus on resolving them.”

The only statement from the United States, so far, was a posting by Trump on social media, speaking in glowing terms. He called it a “truly great meeting,” said they had agreed on many things, and issues were close to being resolved. Among the issues he pointed to were agreements for the global flow of Rare Earth, Critical Mineral, and Magnets, as well as saying China would work with the U.S. to stop the flow of Fentanyl.

The Chinese said they would suspend their special port fees on U.S.-linked ships after the U.S. does the same for the Section 301 investigation and fees on Chinese-owned, operated, and built ships. The reports said the postponement would be for one year while the two sides had further dialogue as part of the trade discussions.

Reports from the media traveling with the U.S. delegation on Air Force One said that US Trade Representative Jamieson Greer confirmed the postponement, but emphasized the U.S. is still committed to restoring its shipbuilding industry. Reports pointed out the broad agreements with South Korea and Japan that include investment in shipbuilding. Back in Washington, D.C., hearings also began on the delayed SHIPS Act.

The shipping industry responded positively to the reports of the postponement. The International Chamber of Shipping called it a “welcome and positive development.” It further said it was “looking forward to receiving confirmation on these reports and further details.”

China reportedly received an immediate 10 percent reduction in the tariffs imposed by the Trump administration. Reports said they would cut the 20 percent additional tariff added in October, after China placed further restrictions on the export of Rare Earth minerals, down to 10 percent. China now has a 47 percent overall tariff, but the looming November expiration of the delays in tariff increases has also been removed.

Trump wrote that President Xi authorized China to begin the purchase of “massive amounts” of soybeans, sorghum, and other farm products. He also said that China would begin the process of purchasing American energy. He said it was possible this would include a large oil and gas purchase from Alaska, all spelling good news for the dry bulk and tanker segments.

Shipping was relieved to hear the progress on trade and the postponement of the fees. However, it was also noted that China recently released its new five-year plan in which shipbuilding continues to be cited as a “key strategic industry.” Reports said it is gaining momentum, and according to the state-owned CGTN (China Global Television Network), China aims to “significantly increase production of green and advanced ships, such as large LNG carriers, ultra-large container ships, and offshore engineering equipment.” They reported goals to support “high-quality manufacturing and rapid scaling” through a partnership with private enterprise.