- The reintroduced SHIPS for America Act proposes strict penalties on shipowners ordering from Chinese shipyards and mandates increasing cargo transport on US-built ships.
- A new penalty port fee system targets both Chinese and non-Chinese operators using “foreign shipyards of concern” such as China’s CSSC.
- The bill escalates US cargo preference requirements for LNG, crude oil, and imports from China, despite widespread concern over US shipbuilding capacity and economic viability.
Most shipping industry dodged a bullet when the US Trade Representative watered down port fees for Chinese ships this month. There was a palpable sense of relief. Enter the SHIPS for America Act, which includes new language on charging port fees to non-Chinese operators ordering at Chinese yards—a policy rejected in the final USTR decision.
The SHIPS Act, initially introduced in December, enjoys broad bipartisan support. Backed by former President Donald Trump, it aims to revive US shipbuilding and has a strong chance of passing in the current political climate.
In addition to expanding port fees, the bill would increase US cargo preference mandates far beyond USTR requirements. The rationale is that compelling shippers to use high-cost, US-built vessels would artificially create demand and sustain domestic shipyards.
Key Features and Penalties
The bill would penalize non-Chinese shipowners ordering from Chinese shipyards—especially China State Shipbuilding Corporation (CSSC)—with escalating port fees. Other Chinese yards could be added to this “foreign shipyards of concern” list by 2027.
The proposed penalty port taxes are:
- $5 per tonne for ships owned/operated/registered in China or if registered there within the past three years.
- $5 per tonne for non-Chinese owners/operators if 50 %+ of their vessels on order or delivered in 24 months are from a shipyard of concern.
- $3.50 per tonne if 25%-49% of orders/deliveries meet that threshold.
- $1.25 per tonne if 50 %+ of the fleet was built/repaired at such shipyards in the last three years.
These fees would not be cumulative; only the highest rate would apply. However, they would be levied on top of USTR port fees and feed into a newly created Maritime Security Trust Fund.
Cargo Preference Mandates
The bill also significantly expands cargo preference requirements:
- Imports from China: Starting five years after enactment, 1% of US-bound goods by tonnage must be on US-built ships, rising 1% annually to 10% by year 14.
- Crude oil exports: 3% on US-flagged ships for four years, then gradually rising on US-built ships to 10% by year 14.
- LNG exports: 2% on US-flagged ships initially, ramping up to 15% on US-built ships by year 22.
This LNG timeline differs from the USTR version, which reaches 15% in 2047, though both plans converge on similar long-term targets.
Industry Concerns
Experts are highly skeptical of the bill’s feasibility. Gordon Sheerer of Poten & Partners called the requirements for US-built LNG carriers “impossible to achieve,” citing:
- Lack of US shipbuilding capability for LNG carriers.
- High costs—2–4x that of Korean-built equivalents.
- Unclear responsibility for compliance (exporter, vessel operator, or terminal?).
- Potential negative impact on US LNG export viability due to higher shipping costs.
Jason Freer of Poten noted that inflated shipbuilding costs could undercut US LNG exports in global markets, raising doubts about the policy’s economic rationale.
The US has not built an LNG carrier since the 1970s and continues to build other types at significantly higher costs than in Asia.
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Source: Lloyd’s List
