The U.S. Trade Representative has scaled back proposed port entry fees on Chinese-built ships, but said it will consider tariffs on Chinese-made cargo handling equipment, adding shipping costs that U.S. farm groups argued against.

The seven-figure fees will be replaced by levies on each ton of cargo unloaded from ships with capacities larger than 80,000 tons — effectively exempting most ships carrying agricultural commodities.

“We kind of dodged the scary bullet that was originally there in the first proposal,” Jay O’Neil, Kansas State University International Grains Program emeritus marketing consultant, told the Capital Press. “Ag exports look like we’ll get out largely unscathed.”

The fees were scaled back from the $1 million to $1.5 million per-stop fee proposed in February. The new fees include $50 per ton of cargo capacity at the first port of call by ships owned and operated by China. The fee will gradually rise to $140 per ton by 2028.

Chinese-built vessels operated by non-Chinese companies will pay $18 per ton at each stop or $120 for every container offloaded. There also will be a separate fee on foreign-built ships delivering cars to the U.S.

The fees will go into effect Oct. 14. In the meantime, the U.S. Office of the Trade Representative will consider a 100% tariff on China-built cranes and tariffs of between 20% and 100% on chassis and chassis equipment.

“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,” U.S. Trade Representative Jamieson Greer said in a statement April 17.

The fees followed through on a trade investigation during the Biden administration that concluded action was justified to counter China’s drive to dominate global shipbuilding and maritime logistics.

China Foreign Ministry spokesman Lin Jian said the port fees will hurt the U.S. as well as others.The fees will increase shipping costs, upset stable supply chains and increase inflationary pressures in the U.S., he said.

“We urge the U.S. to respect facts and multilateral rules, and immediately stop its wrongdoing,” he said April 18. “China will take necessary measures to defend its lawful rights and measures.”

The National Association of Wheat Growers and U.S. Wheat Associates issued a joint statement saying they were grateful the Trump administration backed away from seven-figure fees on Chinese ships.

“This move means a lot to farmers and customers around the world,” said U.S. Wheat Chairman Clark Hamilton, a wheat farmer in Ririe, Idaho.

O’Neil said the proposed changes are a “large step in the right direction.”

Most dry bulk vessels carrying exports of wheat, corn and soybeans will be exempt from the fees.

Most grain vessels are slightly below a 80,000-ton limit, the maximum exemption under the changed rules.

“So we’d also have to start shipping some shipments in slightly smaller vessels — still big vessels, but slightly smaller,” O’Neil said.

The changes may still impact fertilizer imports and meat exports in refrigerated containers, such as beef, chicken and pork, O’Neil said.

The U.S. meat industry I’m sure still has some concerns,“ he said. “Otherwise, I think we’re going to be OK.”

Fees on containers coming in will affect consumer goods, O’Neil said. A container ship that visits more than one port will be assessed once, and not each time it visits a port.

Most proposed rules are currently slated to go into effect in October, O’Neil said. He anticipates “further tweaking” will be done.

A public hearing session on the updates is scheduled for May 19.

“If it were to remain as it sits, it would still cause some heartburn and disruption in the dry bulk trade, but I would think there would be a lot of juggling that would take place that would more or less take care of most of our concerns,” he said.

Boosting American shipbuilding

O’Neil said the original proposed rule was a “knee-jerk” attempt by the Trump administration to incentivize more American ship building.

“The underlying need is real, it’s valid,” he said. About 70% of the world’s fleet was built in China, he said.

There are two options for funding more American-built ships: Tax the American public, or get somebody else to pay for it.

“It’s a Catch-22: If we left the first proposal in place, we would have destroyed U.S. exports,” O’Neil said. “If we reduce all the fees and allow these exceptions, we do not negatively harm U.S. exports, but we take in considerably less revenue.”

The need is multi-faceted, O’Neil added, including expanded shipyard space to build ships and training for shipbuilders and crews to man American-built ships.

“There’s many issues involved beyond simply building the physical ships that have to take place in order to have those ships come online,” he said.

U.S.-built, U.S.-crewed ships are about four times the freight rate on the global market and “largely uncompetitive,” he said.

“That’s also a very big issue; I don’t know that the administration has fully figured that out yet,” he said. “Yes, I think we will finally find some funding to help build and establish a stronger maritime presence in the United States, probably not to the degree that the administration thinks right now — probably something smaller, a little bit less than what it has on the drawing board, but at least we’re starting to address some of our maritime issues.”

Affecting U.S. reliability

O’Neil’s “bigger, overriding concern” is the impact to U.S. agriculture’s reputation on the global marketplace.

“We have sold ourselves for many years, and rightfully so, as a reliable and trustworthy supplier of corn, wheat, soybeans and other agricultural products to the world,” he said. “Now that message is being tarnished.”