USTR completes section 301 investigation of China’s shipbuilding and maritime sectors, publishes final actions and proposed actions

Following public comments, USTR’s Notice finalized less disruptive actions than originally proposed on February 21, 2025. Most notably, non-Chinese shipping companies are no longer charged a fee simply for having Chinese-built vessels in their fleet or for having orders outstanding at Chinese shipyards, as proposed. Instead, the fee will only apply to certain of their Chinese-built vessels that enter U.S. ports. USTR also provided a 180-day grace period (until October 14, 2025) before any fees will be charged. Furthermore, non-Chinese vessel operators and vessel owners subject to the fees may be eligible for a remission if they order and take delivery of U.S.-built vessels.

In addition, USTR also proposed that tariffs ranging from 20 percent to 100 percent be imposed on Chinese-made ship-to-shore (STS) cranes, containers, and other cargo-handling equipment. The public may submit comments on these proposed tariffs by May 19, 2025, and may request to appear at USTR’s public hearing on these tariffs by May 8, 2025.

Finally, in actions not wholly related to China, USTR’s notice also introduces special restrictions on foreign-built vehicle carriers and vessels that export liquified natural gas (LNG). Foreign-built vehicle carriers will be subject to a fee of $150 per car-equivalent unit capacity when entering U.S. ports. The notice also mandates that, starting in 2028, certain percentages of U.S. LNG exports must be carried on U.S.-built, U.S.-flagged and U.S.-operated ships.

Fees Targeting Vessel Operators of China

Starting October 14, 2025, vessels operated by a vessel operator of China that enters a U.S. port from outside the U.S. Customs territory will be subject to a $50 fee per net ton for the arriving vessel. This fee will increase to $80 per net ton by April 17, 2026, $110 per net ton by April 17, 2027, and $140 per net ton by April 17, 2028. The fee can be charged a maximum of five times per year, per vessel. USTR provided no exception to this fee.

A “vessel operator” is defined as the entity which is identified as the operator of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (U.S. Customs and Border Protection (CBP) Form 1300) or its electronic equivalent. A “vessel operator of China” is defined as any entity that is a “vessel operator” that is also an entity:

1. whose country of citizenship is identified as China, Hong Kong, or Macau on the Vessel Entrance or Clearance Statement or its electronic equivalent; 
2. whose headquarters, parent entity’s headquarters, or parent entity’s principal place of business is China, Hong Kong, or Macau;
3. is owned by, or controlled by, a citizen or citizens of China, Hong Kong, or Macau;
4. is owned by, controlled by, or subject to the jurisdiction or direction of China, Hong Kong, or Macau which is presumed when:
   • the entity is a national or resident of China, Hong Kong, or Macau;
   • the entity is organized under the laws of or has its principal place of business in China, Hong Kong, or Macau;
   • 25 percent or more of the entity’s outstanding voting interest, board seats, or equity interest is held directly or indirectly by any combination of the governments of China, Hong Kong, or Macau; or
   • 25 percent or more of the entity’s outstanding voting interest, board seats, or equity interest is held directly or indirectly by any combination of the entities named above.
5. is owned by, or controlled by, an entity listed as a Chinese Military Company pursuant to Section 1260H of the William M. (“Mac”) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116-283); or
6. is an ocean common carrier that is, or whose operating assets are, directly or indirectly, owned or controlled by the government of China or any of its political subdivisions, with ownership or control by a government being deemed to exist for a carrier if:
   • a majority of the interest in the carrier is owned or controlled in any manner by the government of China, an agency of the government of China, or a public or private person controlled by the government of China; or
   • the government of China or any of its political subdivisions has the right to appoint or disapprove the appointment of a majority of the directors, the chief operating officer, or the chief executive officer of the carrier.

Fees Targeting Chinese-Built Vessels of non-Chinese Vessel Operators

Starting October 14, 2025, Chinese-built vessels operated by non-Chinese vessel operators that enters a U.S. port from outside of the Customs territory of the U.S. will be subject to the higher of two fee calculation methods:

• Method one: A fee of $18 per net ton for the arriving vessel, increasing to $23 per net ton by April 17, 2026; $28 per net ton by April 17, 2027; and $33 per net ton by April 17, 2028; or
• Method two: A fee of $120 for each container (as defined in Article 1 of the UN Customs Convention on Containers) discharged in a U.S. port, increasing to $153 per container discharged in a U.S. port by April 17, 2026; $195 per container discharged in a U.S. port by April 17, 2027; and $250 per container discharged in a U.S. port by April 17, 2028.
  • If fee is assessed per container, the vessel operator must report to CBP the total number of containers discharged at a U.S. port, or discharged with an ultimate destination in the customs territory of the United States.

The fee can be charged a maximum of five times per year, per vessel. Non-Chinese vessel operators are eligible to receive a suspension of the fee on a particular Chinese-built vessel for a maximum of three years if the vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater net tonnage. Upon delivery of the U.S.-built vessel, the vessel operator will receive a remission of the suspended fee. If the vessel operator does not take delivery of the U.S.-built vessel within three years of placing the order, the suspended fee will become immediately due.

A “U.S.-built vessel” must meet the following definitions:

1. The vessel is built in the United States;
2. The vessel is documented under the laws of the United States;
3. All major components of the hull or superstructure of the vessel are manufactured (including all manufacturing processes from the initial melting stage through the application of coatings for iron or steel products) in the United States; and
4. The following components of the vessel are manufactured in the United States:
   • Air circuit breakers;
   • Welded shipboard anchor and mooring chain;
   • Powered and non-powered valves in Federal Supply Classes 4810 and 4820 used in piping;
   • Machine tools in the Federal Supply Classes for metal-working machinery numbered 3405, 3408, 3410 through 3419, 3426, 3433, 3438, 3441 through 3443, 3445, 3446, 3448, 3449, 3460, and 3461;
   • Auxiliary equipment for shipboard services, including pumps;
   • Propulsion equipment, including engines, propulsion motors, reduction gears, and propellers;
   • Shipboard cranes;
   • Spreaders for shipboard cranes;
   • Rotating electrical equipment, including electrical alternators and motors;
   • Compressors, pumps, and heat exchangers used in managing and re-liquefying boil-off gas from liquefied natural gas.

Exceptions

The following exceptions apply to non-Chinese operated Chinese-built vessels:

1. U.S.-owned or U.S.-flagged vessels enrolled in the Voluntary Intermodal Sealift Agreement, the Maritime Security Program, the Tanker Security Program, or the Cable Security Program; 
2. vessels arriving empty or in ballast;
3. vessels with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons;
4. vessels entering a U.S. port in the continental United States from a voyage of less than 2,000 nautical miles from a foreign port or point;
5. U.S.-owned vessels, where the U.S. entity owning the vessel is controlled by U.S. persons and is at least 75 percent beneficially owned by U.S. persons;
6. specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms; and
7. vessels principally identified as “Lakers Vessels” on CBP Form 1300, or its electronic equivalent.

Rules Targeting Operators of Foreign-Built Vehicle Carriers

In addition to the above rules targeting Chinese-built vessels, USTR’s action also targets all foreign-built vehicle carriers.

Starting October 14, 2025, all non-U.S. built vehicle carriers will be subject to a fee of $150 per car-equivalent unit capacity when entering a U.S. port from outside of the U.S. customs territory. Vessel operators are eligible to receive a suspension of the fee on a particular vessel for a maximum of three years if the vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater net tonnage. Upon delivery of the U.S.-built vessel, the vessel operator will receive a remission of the suspended fee. If the vessel operator does not take delivery of the U.S.-built vessel within three years of placing the order, the suspended fee will become immediately due. “U.S.-built vessel” is defined above.

Additional Proposed Tariffs on Chinese Ship-to-Shore (STS) Cranes and Cargo Handling Equipment

USTR also proposed placing tariffs on the following products from China pursuant to authorities other than Section 301, such as those related to national security, national emergency, column 1 of HTSUS, or anti-dumping or countervailing duties:

Furthermore, for STS cranes not built in China, USTR proposes that tariffs be placed on the following Chinese-sourced components:

• the main boom;
• the trolley;
• the spreader;
• the cabin;
• the legs;
• the cable reel;
• the power supply;
• the bogie set and wheels; and 
• any information technology equipment.

USTR also proposes that the burden of proof be placed on the importer to prove that the STS crane and/or its components are not made in China or not manufactured by a company owned or controlled by a Chinese person. In a departure from standard rules-of-origin requirements, the importer would be required to prove that a company that is owned or subject to control of a Chinese entity did not manufacture the STS crane (regardless of the location of manufacture), that no component of the STS crane transited through China, and that the installation of the crane was not handled by a company that is owned or subject to control of a Chinese entity.

The public may submit comments on these proposed tariffs by May 19, 2025, and may request to appear at USTR’s public hearing on these tariffs by May 8, 2025.

Requirements for U.S.-Built Vessels Exporting LNG

USTR’s action has significant implications for U.S. LNG export facilities. In particular, Annex IV outlines requirements for U.S.-built vessels and specific components, as well as a schedule mandating use of U.S. vessels for transport of a certain percentage of LNG each year from U.S.-based NG export facilities.

Beginning on April 17, 2028, USTR will impose a restriction requiring use of U.S. vessels for transport of a certain percentage of LNG each year, that gradually increases until 2047, which requires 15% of LNG each year to be exported by U.S.-built, U.S.-flagged, and U.S.-operated vessels. Note that the requirement to export LNG on a U.S.-built vessel applies beginning April 17, 2029.

The schedule for restrictions will be implemented as follows:

• April 17, 2025 – April 16, 2028: no restrictions
• April 17, 2028 – April 16, 2029: 1% on U.S.-flagged and U.S.-operated vessels
• April 17, 2029 – April 16, 2031: 1% on U.S.-built, U.S.-flagged, and U.S.-operated vessels (subsequently applicable)
• April 17, 2031 – April 16, 2032: 2%
• April 17, 2032 – April 16, 2034: 3%
• April 17, 2034 – April 16, 2036: 4%
• April 17, 2036 – April 16, 2038: 6%
• April 17, 2038 – April 16, 2041: 7%
• April 17, 2041 – April 16, 2043: 9%
• April 17, 2043 – April 16, 2044: 11%
• April 17, 2045 – April 16, 2047: 13%
• April 17, 2047: 15%

In addition to the percentage requirements, LNG terminals will be required, beginning on April 16, 2028, to report to the Department of Energy (DOE) the LNG shipments and percentage of LNG shipped on U.S.-flagged, U.S.-built, and U.S.-operated vessels. To encourage contracts for U.S. made vessels, the schedule of restrictions will not apply to a particular LNG vessel for up to three years if the vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater LNG capacity, and can provide proof of such order on demand. Importantly, if the terms of the schedule are not met, USTR “may direct the suspension of LNG export licenses” by the DOE until the terms are met.

USTR sought public comment on these requirements, and several commentors expressed concern – noting the capacity constraints and that there are currently no U.S.-built vessels to transport LNG. Moreover, current infrastructure and shipbuilding capability may present challenges for compliance with these requirements by 2028.

Authored by Jonathan Stoel, Joanne Rotondi, Ben Kostrzewa, Allisa Newman, Mark Ye, and Andrea Fraser-Reid.