USTR’s latest section 301 Action targeting the maritime and logistics sectors

On 9 April 2025, the US President issued Executive Order 14269 (EO), designed to make United States-flagged and built vessels commercially competitive in international commerce and to rebuild America’s maritime manufacturing capabilities.

The EO directs the U.S. Trade Representative (USTR), in coordination with other federal departments, to enforce restrictions, fees, penalties or duties consistent with the USTR’s previous notice dated 21 February 2025.

After the issue of the EO, the USTR issued a Notice of Action and Proposed Action in Section 301 Investigation of China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance, Request for Comments¹ (the Notice) on 17 April 2025.

The Notice includes:

1. formal actions on China’s maritime, logistics and shipbuilding sectors previously proposed in the earlier notice dated 21 February 2025; and
2. proposed additional action on ship-to-shore cranes and other cargo handling equipment, which is now open for public comment.

This is our second briefing on the U.S. Section 301 action targeting China’s maritime, logistics and shipbuilding sectors. Our earlier briefing on the USTR’s proposal dated 21 February 2025 is available here.

Formal action on China’s maritime, logistics and shipbuilding sectors

The Notice sets out four main actions in Annex I to IV of the Notice, which are summarised below. The fees and requirements of the four actions are not cumulative, and a vessel will be subject to the requirements of only one Annex by applying the following order:

• first, a vessel designed for international maritime transport of liquified natural gas (LNG) is subject to Annex IV and not subject to any service fee provided in Annex I, II or III;
• second, a vessel identified as a “vehicle carrier” will be subject to Annex III;
• third, a vessel owned or operated by a Chinese entity will be subject to the service fee imposed under Annex I; and
• finally, a vessel may be subject to Annex II when Annex I and the other Annexes do not apply. There are certain exemptions when Annex II will not apply.

(a)  Service fee on Chinese vessel operators and owners (Annex I)

This service fee is imposed on any vessel with a Chinese operator (including those based in mainland China, the Hong Kong SAR and the Macau SAR) or Chinese owner upon the vessel first entering a US port.

If a vessel makes multiple US entries before transiting to a foreign destination, this fee is assessed per rotation or string of US port calls.

The amount of service fee imposed is based on the vessel’s net tonnage. There is a 180-day exemption period ending on 13 October 2025 during which the rate will be set at US$0. Thereafter, the service fee will increase as shown in the table below. Each vessel will be charged up to five times per year.

Effective Date	Fee Rate (USD/NT)
17 April 2025	0
14 October 2025	50
17 April 2026	80
17 April 2027	110
17 April 2028	140

(b)  Service fee on operators of Chinese-built vessels (Annex II)

This service fee is imposed on non-Chinese vessel operators using Chinese-built vessels, upon the arrival of a Chinese-built vessel to a US port.

The amount of service fee imposed will be the higher of (i) a fee per net tonnage of the vessel or (ii) a fee for each container discharged.

There is a 180-day exemption period ending on 13 October 2025 during which the rate will be set at US$0 for both methods of calculation. Thereafter, the service fee will increase as shown in the table below. Each vessel will be charged up to five times per year.

Effective Date	Net Tonnage Fee (USD /NT)	Per Container Fee (USD /TEU)
17 April 2025	0	0
14 October 2025	18	120
17 April 2026	23	153
17 April 2027	28	195
17 April 2028	33	250

There are important exemptions to this service fee. The service fee imposed does not apply to the following Chinese-built vessels:

• US-owned or US-flagged vessels enrolled in certain maritime programmes (Voluntary Intermodal Sealift Agreement, Maritime Security Program, Tanker Security Program or the Cable Security Program);
• Vessels arriving empty or in ballast;
• Vessels with a capacity of no more than 4,000 TEUs, 55,000 DWT or an individual bulk capacity of 80,000 DWT;
• Vessels entering a US port from a voyage of less than 2,000 nautical miles from a foreign port or point;
• US-owned vessels, where the US entity owning the vessel is controlled by US persons and is at least 75 per cent beneficially owned by US persons;
• Specialised or special purpose-built vessels for the transport of chemical substances in bulk liquid forms; and
• Vessels principally identified as “Lakers Vessels” on CBP Form 1300, or its electronic equivalent.

(c)  Service fee on vessel operators of foreign-built vehicle carriers (Annex III)

This is a new service fee that was not included in the proposed actions in the notice dated 21 February 2025.

It will be imposed on vessel operators of foreign-built “Vehicle Carriers”, chargeable upon the vessel’s first entry at a US port. Vehicle carrier means vessels principally identified as a “Vehicle Carrier” on CBP Form 1300, and a vessel is normally identified as a vehicle carrier when the vessel is designed for wheeled or tracked cargo that can load itself onboard.

The amount of service fee imposed is based on the Car Equivalent Unit (CEU) capacity of the arriving vessel. There is a 180-day exemption period ending on 13 October 2025 during which the fees will be set at US$0. Thereafter, the service fee will be US$150 per CEU capacity of the arriving vessel.

(d)  Restrictions on LNG vessel export (Annex IV)

The Notice contains special restrictions on LNG carriers used to export LNG from the US. These LNG carriers will be exempt from charges for the next three years.

Starting from 17 April 2028, a certain percentage of LNG exports shall be transported on US-flagged and US operated vessels; and from 17 April 2029 onwards, there is a further requirement that such vessels shall be US built. The percentage restriction of US vessels will gradually increase from 1 per cent during the three-year period between 17 April 2028 to 16 April 2031 to 15 per cent starting from 17 April 2047.

As indicated in the Notice, the vessels transporting the exported LNG will likely need to obtain a licence to ensure compliance with this percentage restriction. If the restrictions are not met, then the USTR may direct the suspension of LNG export licences of an operator until compliance with the restrictions is achieved.

For the fees and restriction mentioned in sections (b) to (d) above, the relevant fee or restriction can be suspended on a particular vessel for up to three years if the vessel owner orders and takes delivery of a US-built vessel/LNG vessel of equivalent or greater tonnage/capacity. The vessel owner will be eligible for the remission upon order of, and until delivery of, a US-built vessel.

Proposal on ship-to-shore cranes and other cargo handling equipment

The Notice also proposes additional tariffs on certain ship-to-shore (STS) cranes and other cargo handling equipment (containers, chassis and chassis parts) from China, consistent with the EO dated 9 April 2025. The import tariffs are proposed between 20% and 100%.

The USTR is inviting public comments on the proposed additional tariffs. It is still unclear whether there will be an increase in rates at different phases, a phase-in period or any exemption.

Impact

The Notice contains a number of amendments to the earlier proposed actions, including the phased fees, the 180-day transition period and the new service fee on vehicle carriers.

While some of these actions target Chinese maritime and shipbuilding sectors, others – particularly those concerning vehicle carriers and LNG carriers – can affect non-US built vessels regardless of their country of origin.

The increasing rates and wide-ranging scope could cause significant operational and strategic challenges for and impact on the global shipping sector.

To mitigate immediate impacts, companies need to review their existing contracts immediately to agree liability for these additional port fees under existing terms. Special attention should be paid to clauses such as change in law, force majeure or sanctions in these contracts.

Companies may also wish to negotiate with their shipping companies to strategically reschedule their fleet during the 180-day transition period and use non-Chinese built vessels for their US services to prevent additional costs.

In the long term, traders or charterers may want to have more flexibility on fleet arrangements and routing, while vessel owners will want to pass the additional port fees to charterers.

For non-Chinese operators, exploring alternative shipping routes – such as making a final stop in Canada, the Caribbean or Central America before entering the US – may help to take advantage of the 2,000 nautical mile exemption to reduce costs.

We also recommend companies monitor the constantly changing regulatory environment in the US, including any possible exemption policy, and be prepared to adjust their supply chains and operational strategies accordingly to minimise potential legal and commercial risks.

For specific legal advice, please contact your usual Herbert Smith Freehills partner or our shipping specialists below.

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1. USTR website, available at: https://ustr.gov/sites/default/files/files/Press/Releases/2025/301%20Ships%20-%20Action%20FRN%204-17.pdf