The Office of the United States Trade Representative (“USTR”) announced its proposed actions under Section 301 of the Trade Act of 1974 (“Section 301”), in connection with its Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance (the “Proposed Action”) on February 21, 2025. 

In short, the Proposed Action includes a variety of recommended remedies, including (1) imposing significant port fees on Chinese vessel operators and other operators of Chinese-built vessels, and operators with orders for new vessels being built in Chinese yards, and (2) implementing requirements for mandatory use of U.S.-flag and U.S.-built vessels to carry fixed percentages (increased annually) of U.S. exports. 

At this time, the Proposed Action is not final and USTR is seeking public comment by March 24, 2025, as discussed further below. Given the role that ocean transportation plays in the economy, the Proposed Action would have far-reaching effects to the extent it is adopted. Accordingly, vessel owners and operators and other interested parties in the industry should consider commenting on the Proposed Action and/or appearing at the upcoming hearing with respect to how the Proposed Action may affect them and their industry. In addition, at a minimum, shipowners, operators, charterers, and shippers should start considering their operations, contracts, and how the Proposed Action may affect them. 

It is worth noting that in the days since USTR released its Proposed Action, the Trump administration has taken several significant steps focused on promotion of the U.S. shipbuilding and maritime industry, including measures drawing revenue from the proposed Section 301 fees:

  1. Creation of a Shipbuilding Office: President Trump announced plans to establish a new office of shipbuilding within the White House. The Office of Maritime and National Capacity is organized within the National Security Council and aims to revitalize domestic ship production.
  2. Tax Incentives: The administration plans to offer special tax incentives to encourage investment in both military and commercial shipbuilding.
  3. Executive Order Under Consideration: An executive order (“EO”) is under consideration that includes measures to support U.S. shipbuilders. A draft order, which has been circulated in recent days throughout the maritime industry, reportedly includes a directive that USTR impose, through the ongoing 301 investigation, tonnage-based fees on Chinese-built and Chinese-flagged ships (or vessels in fleets that contain such ships) entering the United States. However, at this point, the EO is still in draft form and has not been signed or released to the public.

Background

Section 301 authorizes USTR to investigate foreign trade practices and impose measures on foreign countries found to violate U.S. trade agreements or engage in acts that are “unjustifiable,” “unreasonable,” or “discriminatory” in ways that burden U.S. commerce. USTR’s powers under Section 301 are quite broad. 

In March 12, 2024, five major U.S. labor unions filed a Section 301 petition regarding alleged acts, policies, and practices of China to dominate the maritime, logistics, and shipbuilding sector. The petition was accepted, and on April 17, 2024, USTR initiated an investigation. Following its investigation, on January 16, 2025, in the last days of the Biden Administration, USTR published its report and determined that China’s practices were “actionable”.[1] 

In connection therewith, USTR published the Proposed Action and is now seeking public comments from interested parties. Comments must be submitted via USTR’s online portal (https://comments.ustr.gov/s/) no later than March 24, 2025. USTR has also scheduled a public hearing on the proposed actions on March 24, 2025, in the main hearing room of the U.S. International Trade Commission located at 500 E Street S.W., Washington, D.C. 20436. Interested parties may request to appear at the hearing no later than March 10, 2025, and the request should include a summary of the proposed testimony and may be accompanied by a pre-hearing submission. Remarks at the hearing are limited to five minutes. 

Proposed Action

The Proposed Action includes the following fees and service restrictions:

Fees

Service Restrictions

In addition to the above fees, the Proposed Action includes restrictions on services aimed at promoting the transport of U.S. goods on U.S. vessels. In that regard, the international maritime transport of all U.S. goods (e.g., capital goods, consumer goods, agricultural products, and chemical, petroleum, or gas products), must comply with the following schedule: 

“As of” Effective Date

Effective Date of Action

Two Years Following Effective Date of Action

Three Years Following Effective Date of Action

Seven Years Following Effective Date of Action

Percentage of U.S. Products, Per Calendar Year, Exported by Vessel, Restricted to Export on U.S.-Flagged Vessels by U.S. Operators

At least 1 percent

At least 3 percent

At least 5 percent (at 3 percent of which must be U.S.-flagged, U.S.-built, by U.S. Operators)

At least 15 percent (at 5 percent of which must be U.S.-flagged, U.S.-built, by U.S. Operators)

The Proposed Action also includes a requirement that U.S. goods are to be exported on U.S.-flagged, U.S. built vessels, but may be approved for export on a non-U.S.-built vessel provided the operator providing international maritime transport services demonstrates that at least 20 percent of the U.S. products, per calendar year, that the operator will transport by vessel, will be transported on U.S.-flagged, U.S.-built ships. 

Other Actions

In addition, the Proposed Action included a recommendation that relevant U.S. agencies take actions to reduce exposure to and risk from China’s promotion of the National Transportation and Logistics Public Information Platform (“LOGINK”) or other similar platforms, including investigating 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. 

Key Takeaways


[1] The full 182-page report titled Section 301 Investigation: Report on China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance, may be found here: https://ustr.gov/sites/default/files/enforcement/301Investigations/USTRReportChinaTargetingMaritime.pdf

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