Port Fees Will Pave the Way for America’s Maritime Resurgence
The MOC
By Rob Gioia
March 25, 2025
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American commercial shipyards must rise again to counter the People’s Republic of China’s growing commercial maritime advantage. The first step is to target Chinese-origin vessels calling U.S. ports. Empowered by the Office of the United States Trade Representative’s (USTR) Section 301 report into China’s effort to dominate the global shipbuilding industry, President Trump’s draft executive order imposes a docking fee on all vessels from fleets composed of Chinese-built or flagged vessels. This order is necessary but will impose higher shipping costs on most large operators making U.S. calls, creating the potential for supply shortages and price hikes. To succeed, President Trump must implement his docking fee alongside a partial fee refund per docking of a U.S.-built vessel at American ports.
Background
Beginning in 2006, Beijing seized the global market for large container ships by increasing state-backed financing and subsidies for its shipyards, which surpassed $132 billion last decade. Analyses of the 2024 calendar year suggest that Beijing’s long-term investments paid off. Today, China produces an average of 1,700 commercial ships per year, hosts a shipbuilding capacity of 23.25 million tons, and received 74 percent of global shipyard orders last year. Of all global 2024 orders, 81 percent of container vessels, 74 percent of tanker vessels, and 60 percent of freighters were Chinese-built.
By comparison, the United States produced just five large commercial ships in 2024. American shipyards can only host 100,000 tons of shipbuilding capacity at a time and represent less than 0.5 percent of the global shipbuilding market share. U.S. allies South Korea and Japan—two large investors in their respective bulk shipbuilding industries—similarly struggle to compete with China’s state-backed yards and have seen their container vessel market share decline since 2000.
The results of USTR’s Section 301 investigation into China’s shipbuilding sector found certain unfair market practices are responsible for its international dominance: top-down engineered state subsidies; artificially low prices, labor costs, and labor standards; and domestic restrictions on shipyard competition from non-Chinese companies. USTR’s Section 301 report found that China’s targeting of shipbuilding sector dominance is unreasonable, burdens U.S. commerce, and overpowers America’s commercial shipping industry. China’s near-monopolized supply of vessels foments a dangerous reliance on China for U.S. international shipping, making it capable of disrupting American trade during conflicts. These conclusions support President Trump’s decision to institute tariff-based and non-tariff-based enforcement measures to combat unfair Chinese shipbuilding practices under Section 301(a)(1) of the Trade Act of 1974.
As part of its investigation, USTR recommended three docking fees, one fee refund, and one export restriction. The docking fee which inspired President Trump’s draft executive order is below in near-exact language with minor format revisions:
“Upon the entrance of a Chinese-built vessel to a U.S. port, a fee to be charged to that vessel’s operator on the international maritime transport provided via that vessel:
(a) At a rate of up to $1,500,000 [or];
(b) Based on the percentage of Chinese-built vessels in that operator’s fleet:
- For operators with 50 percent or greater of their fleet comprised of Chinese-built vessels, the operator will be charged up to $1,000,000 per vessel entrance to a U.S. port;
- For operators with greater than 25 percent and less than 50 percent of their fleet comprised of Chinese-built vessels, the operator will be charged a fee up to $750,000 per vessel entrance to a U.S. port;
- For operators with greater than 0 percent and less than 25 percent of their fleet composed of Chinese-built vessels, the operator will be charged a fee up to $500,000 per vessel entrance to a U.S. port.”
Executive Order Draft Measure
In a wide-ranging draft executive order shared with the Wall Street Journal, President Trump included a docking fee measure on all fleets with Chinese-built or flagged ships per American port call. This measure, while inspired by USTR’s recommended fee on Chinese-built or flagged vessels per U.S. port call, extends charges to all ships—regardless of origin—in the same fleet as Chinese-built or flagged vessels. Once implemented, U.S. Customs and Border Protection will collect docking fees from vessels at ports, similar to tariffs.
A charge on vessels by fleet association will expose most major carriers to increased short-term transport costs until they phase Chinese ships out of their fleets while likely resigning the prominent Chinese operator COSCO to a difficult future in the American trade. The draft order did not specify a fee rate, but it may adopt USTR’s recommended $500,000 to $1,000,000 scale.
President Trump’s proposal will lower China’s commercial shipyard market share by increasing the operational costs for shippers docking at U.S. ports. Leveraging the price of access to the largest economy in the world will convince many shipping operators to reduce the share of Chinese-built and flagged vessels they operate. In the immediate term, South Korean and Japanese shipyards may benefit most from the order, since they are the only countries besides China with sizeable shipbuilding industries able to take new orders at scale. The cost imposed by the fee on shipping containers from Asia to the United States—projected to surpass $20 billion total—will eliminate Chinese yards’ subsidy advantage.
As demand is driven away from a more expensive China, the near-monopolistic market share of its global newbuilding orders will decline. In its place, South Korean, Japanese, and hopefully American commercial vessel orders will rise as operators work to dilute the presence of Chinese ships in their fleets. Falling demand for Chinese vessels will incentivize allied and domestic shipyard production, serving U.S. security interests by de-risking American trade lines and boosting the domestic industrial base. American policymakers discovered Chinese leverage over domestic port infrastructure and cargo data when the COVID-19 pandemic impacted supply lines, causing mass shortages of medical supplies like antibiotics and respirators. By incentivizing companies to shift to alternative shipyards as part of a wider shift away from Chinese maritime infrastructure like cranes and the cargo tracking LOGINK platform, the United States can lessen China’s economic power in future conflicts.
Imposing costs on Chinese yards through lost commercial demand will restrict their ability to build at scale, potentially reverberating in decreased production of other infrastructure like cranes or even military vessels. Inversely, allied and domestic yards will receive boons to their industrial base workforces and investment, increasing commercial production and support for naval operations.
Furthermore, the duties collected can be redeployed to create a multi-billion-dollar fund to support U.S. shipyard development. While the true annual federal income is indiscernible without further knowledge of President Trump’s docking fee rates, economic models of fees collected against annual Chinese-built vessels predict a federal income range of $12.5 billion, if each is charged the minimum $500,000 per call, to $37.5 billion, if each is charged the maximum $1,000,000 per call. This measurement assumes first-year static fleet compositions, while future estimates with 30 percent fewer Chinese vessels predict an annual income range of $5 billion to $15 billion.
Negative Externalities
The broad language of President Trump’s draft order holds all major freight operators shipping into the United States to a fee as high as $1,000,000 per vessel per call. This fee will charge nearly all major shipping operators as much as $400 per Twenty-Foot Equivalent Unit (TEU) per U.S. port call. With most container vessels making several U.S. calls per trip, this expense will likely be passed to importers and then to consumers. This measure risks increased prices on imported consumer goods and input materials for domestic production. However, these inflationary prices are unlikely to have a large impact on importers and consumers. Container ships vary in capacity from 1,000 TEU to 24,000 TEU, with each TEU capable of holding tens of thousands of dollars’ worth of goods. While even the most vulnerable low-value, low-margin products will be more susceptible to increasing shipping costs, the sheer volume of products onboard will dilute the port fee’s inflationary effects.
Shipping disruptions to U.S. ports are more likely to cause significant price hikes. Major operators are unlikely to completely dispose of their Chinese vessels. Instead, they are likely to replace their routes with foreign alternatives. Prolonged high fees will divert significant port traffic to alternative ports in Mexico and Canada, where the goods will then be trucked in through the U.S. southern border, to avoid docking charges in U.S. ports.
Operators may also consolidate cargo into ultra-large container vessels, holding over 20,000 TEU, to reduce the number of port calls. This will reroute shipping lines from smaller ports, many of which lack the infrastructure to host larger vessels, and create a container ship backlog at a few, large ports. The traffic bottleneck at these large ports will increase vessel dwell times—the wait time before offloading—creating product delays, shortages, and price hikes.
Even with a rate scale promising lower docking fees for fleets that decrease their reliance on Chinese vessels, there is no direct incentive to buy American vessels. While President Trump’s draft order includes tools for long-term industry growth, including tax cuts and investment benefits, American yards will struggle to compete with non-Chinese competitors in the medium-term. While the United States was once able to produce ships at a massive scale, America’s commercial shipbuilding output has declined 85 percent since the Korean War as yards capable of large vessel production continue to disappear. Operators will more likely head to better-developed South Korean and Japanese yards unless they are incentivized to buy American.
Proposed Solution for Externalities
The addition of a docking fee refund that promises partial tax recovery per use of an American international shipping vessel will encourage U.S. yard orders, lower costs for operators investing in American maritime industry, and reduce the impact of price increases on consumers and manufacturers.
Framework for a fee remission exists within USTR’s Section 301 proposal, giving President Trump a ready-made tool to include via executive order:
“Additional fees on the maritime transport services charged to an operator addressed in this section, may be refunded, on a calendar year basis, in an amount up to $1,000,000 per entry into a U.S. port of a U.S.-built vessel through which the operator is providing international maritime transport.”
Offering partial remissions for increased docking fees will direct additional demand toward American shipbuilding, which will in turn attract investments and grow the industrial base. This refund will help American shipyards develop outside the strong orbits of South Korean and Japanese production. While both Asian nations are important allies in combatting Chinese maritime dominance, an overreliance on their industries will slow U.S. shipyard growth by depriving it of demand. South Korean and Japanese yards are still beneficiaries of state subsidies and financing, have lower labor costs relative to the United States, and have spent decades developing their shipbuilding capacities; making them tough competition for American yards relying on private investors. In the absence of short-term American subsidies or investments capable of leveling competition, leveraging monetary incentives through refunds will allow U.S. shipyards to build an early market for their products.
Even though less federal income will be collected for domestic maritime investments, American yards will receive more commercial income from incentivized orders. Furthermore, offsetting docking costs on operators will reduce transshipment through third countries by providing a cheaper path to fee avoidance, especially if trade war plans on Mexican and Canadian imports continue. A refund, applying per docking, will also minimize cargo consolidation into ultra large container vessels by incentivizing operators to increase port calls with U.S.-built vessels. To increase their call frequency, operators will likely demand smaller American vessels capable of docking at many U.S. ports per route, increasing traffic to smaller ports and reducing bottlenecks at larger ports.
Port fee refunds for operators that use U.S.-built vessels will help make U.S. shipbuilding the prime beneficiary of declining Chinese market share and accelerate its return to maritime dominance.
Conclusion
The United States must secure its global hegemony by stifling Chinese shipbuilding and fostering a resurgent American maritime industrial sector. If allowed to dominate international shipping, Beijing will weaken American economic resilience and ability to project power. President Trump must institute his proposed docking fee on fleets with Chinese-built or flagged ships to counter Chinese yards, protect national security, and fund U.S. industry. Increased prices and lost port traffic are inevitable in the short term, but offering a fee refund will help reduce economic costs and incentivize domestic orders over the long haul. The United States owes future Americans a duty to reclaim its industrial base in a fair-trade based international order. Therefore, it must weather economic uncertainty to revive U.S. shipyards.
Rob Gioia is a sophomore at the University of Michigan majoring in Public Policy. He holds career interests in maritime law, trade policy, and great power competition.
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.