The Us And China Are About To Launch The Next Front In Their Trade War

The U.S.-China trade war has lurched from fragile truce to bare-knuckle brawl. It is about to intensify further when the two countries hike fees on each others’ commercial ships Tuesday — a move that, on the U.S. side, could end up raising consumer costs and driving down imports from Asia.

Along with a new tussle over China’s global chokehold on the supply of critical minerals — which prompted President Donald Trump to threaten 100 percent tariffs and new curbs on “all critical software” in retaliation — China’s Ministry of Transport announced Friday that it is matching the Trump administration’s planned increase in port fees on Chinese-owned and operated ships.

Those new fees will have relatively minimal impact on the U.S. given that the U.S. exports just a fraction of the cargo to China that flows the other way. But Beijing’s willingness to impose the fees underscores how a U.S.-China trade conflict that began with tariff increases in February has bled into economic sectors previously insulated from those tensions. And it raises the stakes in ongoing negotiations ahead of the Nov. 10 deadline for a U.S.-China trade deal.

”This is symbolic — less than 1 percent of U.S. vessels docking in China annually are U.S.-flagged vessels, so the reality is this basically has no real impact,” said Cameron Johnson, a senior partner at Shanghai-based supply chain consultancy Tidalwave Solutions. “But it signals that Beijing will match every single effort the United States targets against China — if the U.S. sanctions a Chinese company, they’re going to sanction a U.S. company. If we impose export controls on technology, they’re going to do export controls on technology. We have just now escalated to a whole new level of trade warfare that nobody was expecting.”

The Trump administration says the U.S. port fees will help spark a renaissance for the U.S. shipbuilding industry and reduce what the Office of the U.S. Trade Representative says is a risky U.S. dependency on Chinese shippers.

Major ocean carriers have signaled they plan to absorb the new costs. But U.S. retailers, manufacturers and shipping experts warn that will likely be short-lived and that eventually they will have to pass the fees on to consumers. The higher costs will further strain the shipping industry, which transports more than 80 percent of global trade and is already grappling with the disruptive effects of Trump’s sweeping tariffs.

Cargo imports to the U.S. carried by ships that are either Chinese-owned or operated by Chinese companies will face port fees of $50 per ton starting next week, with the fee set to increase by $30 per ton each year over the next three years. Non-Chinese operators of ships built in China will also face charges, according to the new policy. China’s retaliatory port charges will also annually escalate to a maximum of $157 in 2028.

The U.S. and Chinese fees “risk harming their exporters, producers and consumers at a time when global trade is already under pressure,” said Joe Kramek, president of the nonprofit shipping sector advocacy group World Shipping Council.

One corporate lobbyist for a group representing the U.S. maritime industry said its member companies are bracing for supply chain complications, as well as higher costs from fees as well as regulatory burdens to prove compliance.

The new penalties are the result of a petition filed last year by five U.S. labor unions, which triggered a trade investigation that found that China’s maritime and shipbuilding practices are harmful to the U.S. industry, which has been in decline since the late 1970s.

“If the goal is to get U.S. shipbuilding back up and running, we think there are other ways that we need to focus on doing that — just putting fees on Chinese vessels isn't going to solve that issue,” said Jonathan Gold, the vice president of supply chain and customs policy at the National Retail Federation, a D.C.-based group that represents companies in the retail sector.

Supporters of the new port fees argue, however, that they are part of a series of measures that will help restore American maritime dominance, including an executive order Trump signed aimed at creating financial incentive programs for U.S. shippers.

The United Steelworkers and International Association of Machinists and Aerospace Workers, two of the groups that filed the petition last year, praised the final results of the investigation on Friday.

“America’s shipbuilding and maritime sectors are key to our economic and national security. For far too long, policymakers have ignored the dramatic decline in these sectors and the actions China has taken to dominate them,” they said in a statement.

“From the supply chains to the shipyards to the ports to the vessels themselves, America needs to restore these capabilities. The USTR’s relief measures will help put our nation on a better course,” they added.

The labor unions pushed the administration to ensure the fees would be substantial enough to make Chinese ships less competitive and encourage demand for American vessels, said Michael Wessel, president of the Wessel Group consulting firm, which collaborated closely with the unions that filed petitions last year. “We have aimed for fees that would serve as a genuine deterrent” for using Chinese ships, Wessel said.

A White House official did not respond to a series of specific questions covering price increases and disruptions to shipping flows when reached for comment, but did reiterate the president’s broad mission: “The Administration is committed to safeguarding America’s national and economic security while delivering economic relief for the American people,” said the official, who was granted anonymity to discuss trade-related issues.

The port fees threaten to further dent the Trump administration’s already strained relationship with China weeks prior to a self-imposed Nov. 10 deadline to reach a new U.S.-China trade deal. The two governments have been engaged in negotiations since May, after Trump briefly raised tariffs on Chinese goods to triple digits, but have made little progress on core issues.

China has retaliated to Trump’s recent trade actions with a range of measures, including export controls on critical minerals and halting purchases of U.S. soybeans — a major blow to farmers in the Midwest — as well as the new fees on American ships.

In a statement released Sunday. a spokesperson for China's Commerce ministry said the the port fee retaliation represented "necessary defensive actions aimed at safeguarding the legitimate rights and interests of Chinese industries and enterprises, as well as preserving a fair competitive environment in the international shipping and shipbuilding markets."

The U.S. port fees on Chinese ships are predicted to have a much larger impact on the shipping industry. Maritime consultancy firm Alphaliner found in an analysis published earlier this month that the fees will cost the top 10 container shipping companies — including China’s state-owned shipper COSCO, Denmark’s Maersk and France’s CMA CGM — a total of $3.2 billion by the end of 2026.

"The U.S. trade policies are really now starting to hurt some businesses, and while some companies, for example, in Europe, can absorb the cost, others in China, cannot,” said Philip Damas, the head of Drewry Supply Chain Advisors, a maritime consultancy firm. “There will be either subsidies or more retaliation, which is not what the administration was intending.”

Some U.S. companies will also be hit by millions in fees, according to estimates from Drewry Supply Chain Advisors, because they operate ships built in China.

Industry giants including the Swiss-based Mediterranean Shipping Company and France’s CMA CGM are scrambling to swap in non-Chinese built ships — what CMA CGM calls “fleet and operational adjustments” — to allow them to continue to service Asia-U.S. routes while avoiding the new charges.

“The industry is facing huge uncertainty as to how to prepare to comply with these incoming regulations,” said Thomas Kazakos, secretary general of the International Chamber of Shipping, a United Kingdom-based nonprofit advocacy group. “This may lead to carriers avoiding U.S. ports to safeguard against disproportionately high risks and costs.”

Chinese shipper COSCO, the world’s fourth-largest cargo carrier and the biggest in Asia, can’t escape those charges. The new regulations will impose around $3.5 million in extra costs for each incoming COSCO ship carrying a standard load of 10,000 20-foot containers. That means COSCO will pay an estimated $700 million in U.S. port fees after the first year, while the firm’s Hong Kong-based subsidiary OOCL will pay around $400 million, according to Drewry.

COSCO didn’t respond to a request for comment, but pledged to ensure “stable and reliable services” in the U.S. in a statement last month. Shipping analysts say COSCO and other companies will inevitably reduce shipments to the U.S. to avoid those charges.

“The fees can't help but have a constraint on the shipping cargo capacity coming to the U.S. and with less capacity, the pricing of shipping goes up meaning you could literally have empty shelves during Christmas,” said John McCown, a fellow at the Center for Maritime Strategy and an expert on international container shipping.

“We’re looking at a full year or more where you’ll see double-digit declines in container traffic and that's going to have a direct impact on dock workers,” McCown said. “The truck drivers that move those loads, the warehousing — everybody that touches that is going to be hurt and there'll be jobs lost.”