Emerging Two-Tier Market As U.S. Considers Penalizing Chinese-Built Ships

Anticipation of Donald Trump’s potential restrictions on Chinese-built vessels is reshaping the shipping market, with early signs of a two-tier system forming.

Chinese Ships Losing Appeal for Long-Term Charters

• BRS, a leading shipbroker, reports that Chinese-linked ships are becoming less attractive for long-term charters, especially those requiring U.S. port calls.
• Law firm Hill Dickinson notes that charter-party agreements are being revised to account for expected U.S. measures against Chinese-built ships.

Potential U.S. Penalties on Chinese Ships

The U.S. Trade Representative (USTR) has proposed significant penalties for Chinese-built vessels:

• Up to $1.5 million per U.S. port call for ships built in China.
• $1 million per port call for operators of such ships.
• Mandatory U.S.-flag shipping requirements to boost domestic shipbuilding.

Trump has strongly indicated he will implement these policies as part of a broader effort to revitalize the American shipbuilding industry.

Impact on the Global Shipping Market

• A Two-Tier Freight Market:
  • Non-Chinese ships (mainly Japanese and Korean) expected to command higher rates.
  • Chinese-built ships may trade at discounted rates due to restricted U.S. access.
• Higher Freight Costs & Route Diversions:
  • Freight rates are likely to rise.
  • More cargo traffic may divert to Mexican ports.
  • Some Chinese shipbuilding contracts could be canceled.

China’s Response & Industry Reaction

• Clarksons Research estimates that 37,000 U.S. port calls in 2024 involved ships that may face the $1.5 million fee—accounting for 83% of containership calls and 30% of tanker stops.
• China dominates global shipbuilding, controlling two-thirds of the market.
• The U.S. has just a 1% share, with its shipbuilding industry weakened by decades of globalization.
• Chinese state media criticized U.S. plans, arguing that America’s shipbuilding decline is due to its hollowed-out industrial infrastructure.

With Trump’s decision expected soon, the global shipping industry faces uncertainty, rising costs, and shifting trade routes as U.S.-China tensions escalate in maritime trade.