Introduction
The shipbuilding industry is a critical sector for the economic and geopolitical strength of any nation, especially when it intersects with commercial shipping and maritime power. In the age of globalisation and geo-economic competition, the relationship between the United States and China in the shipbuilding domain is marked by growing tensions, particularly regarding trade policies such as the imposition of port tariffs and duties on shipbuilding products.
The recent proposal by the U.S. Trade Representative (USTR) to impose substantial port fees on Chinese-built and Chinese-operated vessels is poised to significantly impact the global freight market. The proposed fees include charges of up to $1.5 million per port call for operators using Chinese-built ships and up to $1 million per port call for Chinese maritime transport operators. Additionally, operators with existing or pending orders from Chinese shipyards may face similar fees. Implementing these fees is expected to lead to increased operational costs for shipping companies, which will likely be passed on to consumers through higher freight rates. The World Shipping Council estimates that these fees could add approximately $600–$800 per container, effectively doubling the cost of shipping U.S. exports. This escalation in shipping costs may reduce the competitiveness of U.S. exports, potentially leading to decreased trade volumes and shifts in global trade patterns.
The U.S. Shipbuilding Industry: Limited in Scope, Strategic in Value
The United States has a rich history in shipbuilding, particularly in the military and domestic commercial sectors. The Jones Act of 1920—which requires that vessels operating between U.S. ports be built in the country, owned by American entities, and crewed by U.S. citizens—has long shielded the domestic industry from foreign competition. Yet despite this protection, America’s commercial shipbuilding capacity has shrunk dramatically. Today, only a handful of shipyards remain active, hampered by high construction costs and limited global competitiveness. Nevertheless, the sector remains strategically vital, deeply intertwined with national security and supply chain resilience.
China’s Commanding Lead in Global Shipbuilding
In contrast, China has emerged as the dominant force in global commercial shipbuilding, accounting for 45% of the dry bulk fleet’s newbuild orders, according to Signal Ocean data. This leadership is supported by substantial state subsidies, low labor costs, and an expansive industrial ecosystem. Chinese yards are renowned for their cost efficiency and rapid delivery times, attracting global demand—including from U.S. shipowners. Beyond hull construction, China also exports a wide array of ship components, from engines to maritime electronics, reinforcing its central role in the maritime supply chain. While Japan remains highly competitive in dry bulk construction (42%), South Korea leads the tanker segment with a 53% share—demonstrating regional specialisation and deliberate industrial policy. As of 2025, the global tanker fleet (VLCC, Suezmax, Aframax, Panamax, MR2, MR1) is approximately 6,000+ vessels. (as depicted in the image below) China accounts for 22% of the global tanker shipbuilding market, meaning roughly 1 in 5 tanker vessels in the current fleet is likely Chinese-built.
Prospects for a U.S. Shipbuilding Revival
Rebuilding the U.S. commercial shipbuilding sector presents formidable challenges. Currently, the United States accounts for just 0.13% of global commercial vessel production, while China, Japan, and South Korea together command more than 90% of the market. Further compounding this disparity, ship construction costs in the U.S. are estimated to be three to four times higher than in East Asia. Revitalising the domestic industry would demand large-scale investments in infrastructure, advanced manufacturing, and skilled labor development.
To bridge these capability gaps, strategic partnerships with established shipbuilding nations like South Korea and Japan have been suggested. However, overcoming the deeply rooted advantages of Asian competitors—bolstered by decades of industrial policy, scale, and specialisation—remains a significant hurdle.
Against this backdrop, the U.S. government is increasingly turning to geoeconomic tools such as port tariffs, signalling a broader departure from traditional free-trade principles toward a more interventionist industrial strategy. Bolstering the domestic shipbuilding base is now framed not just as an economic goal, but as a strategic imperative—central to national defense, supply chain security, and maritime sovereignty. This urgency is magnified by ongoing global instability, including the war in Ukraine and rising tensions in the Indo-Pacific.
Yet, tariffs alone will not restore America’s competitive edge in shipbuilding. Lasting progress will depend on sustained public and private investment, technological innovation, and a coordinated industrial policy that supports long-term capacity-building.
Implications for International Shipping and Global Trade
Increased tariffs on Chinese shipbuilding exports and potential port duties on Chinese-built ships could trigger significant disruptions in the global shipping system. Shipowners operating Chinese-built vessels may face higher costs to access U.S. ports, costs that are likely to be passed along the supply chain, contributing to higher transportation costs and inflationary pressures. Moreover, if China retaliates with reciprocal measures, it could restrict American companies’ access to Chinese ports, leading to a realignment of trade flows and a deepening of economic decoupling between the two powers.
The Grain Impact
Increased Transportation Costs: The American Farm Bureau Federation estimates that proposed port fees could add between $372 million and $930 million in annual transportation costs for bulk agricultural exporters. This significant rise would erode the cost advantages that have traditionally helped U.S. farm products stay competitive in global markets. For example, the extra fees could increase the cost of shipping a bushel of soybeans—currently trading at $10.07—by as much as 27.75 cents. In commodities trading, where margins are razor-thin and often decided by just a few pennies per bushel, this would represent a serious blow to exporter profitability.
Reduced Export Competitiveness: As shipping costs climb, U.S. grain exporters may be forced to reduce their sale prices to remain competitive, thereby cutting into already tight profit margins. The financial strain could ultimately lower the volume of U.S. grain exports, especially as buyers shift to countries with lower transportation costs. Reports from exporters indicate that freight costs have surged by as much as 40%, making it increasingly difficult to secure bids for shipments of soybeans, corn, and wheat.
Impact on Farmers: This cost burden trickles down directly to American farmers, many of whom depend on international markets to sell their harvests. Without access to affordable freight, growers face the grim prospect of being priced out of global supply chains. The American Soybean Association has warned that these additional port fees could effectively shut U.S. soybeans out of export markets altogether, threatening the economic viability of farming operations across the Midwest and beyond.
Broader Economic Implications – Including Tanker Sectors: While the grain sector is most directly affected, the proposed port fee hikes could have ripple effects across the broader U.S. economy. The energy sector, for example, has voiced concern that rising transportation costs could undermine U.S. oil and gas exports. Tanker operators warn that increased fees may hamper efforts to solidify energy dominance by making U.S. shipments less competitive in the global marketplace. Likewise, the mining industry—another key user of bulk and tanker shipping—has flagged potential supply chain disruptions and higher export costs that could bring parts of the sector to a standstill.
Based on The Signal Ocean Voyages API data and in connection with the recent U.S. proposal to impose port fees of up to $1.5 million per call on Chinese-built ships, here’s a comprehensive market impact analysis of U.S. port fees on Chinese-built vessels.
Market Impact Analysis of U.S. Port Fees on Chinese-Built Vessels
Vessel Size Segments Most Exposed:
Key Insights from the Data
DRY BULK
In 2024, there were a total of 640,305 global port calls, of which 18,386 occurred at U.S. ports—representing approximately 2.87% of the global total. Notably, Chinese-built ships accounted for 6,480 of these U.S. port calls, comprising 35.24% of overall U.S. port activity. This indicates that more than a third of vessel calls in the United States were made by Chinese-built ships, highlighting the significant exposure of the U.S. freight market to the proposed fees targeting such vessels. Segment analysis reveals that Supramax (24.65%) and Handysize (36.16%) vessels dominate the U.S. port landscape. Among Chinese-built vessel calls specifically, Handysize, Supramax, and Panamax are the top three contributing classes, underscoring the broad segmental exposure within U.S. ports.
U.S. Port Activity Overview
Total global port calls in 2024: 640,305
Total U.S. port calls: 18,386 (~2.87% of global calls)
Chinese-built ships accounted for 6,480 U.S. port calls, or 35.24% of total U.S. port activity
Segment Exposure: Vessel Class Analysis
Supramax (24.65% of U.S. port calls) and Handysize (36.16%) dominate the U.S. port landscape.
Potential Cost Implications
If each of the 6,480 annual port calls by Chinese-built ships were to incur the $1.5 million penalty, total costs could reach:
6,480 x $1.5 million = $9.72 billion annually
Even if only a portion of these Chinese-built vessel calls are subjected to the proposed tax—such as in cases where legacy contracts are exempt or enforcement is only partial—the financial burden could still have widespread effects across the maritime and trade sectors. Freight rates for dry bulk cargoes, including grain, coal, and fertilizer, could rise as owners factor in the additional costs. Charter party negotiations may also be impacted, with vessel owners likely to demand tariff-related compensations to offset the new fees. This, in turn, could erode the competitiveness of U.S. exports, particularly in agriculture and energy, by increasing overall transportation costs and reducing price advantages in international markets.
Here’s a chart visualizing the implications of U.S. port fees on Chinese-built dry bulk vessels, ranked by estimated impact level (1 = Low, 5 = High). Key takeaways:
The primary concerns stemming from the proposed tax on Chinese-built vessels include higher freight rates, reduced export competitiveness, and increased pressure on U.S. grain exports. These factors could significantly impact trade flows and the economic viability of key export sectors. Moderate risks include potential disruption in chartering activity, the need for fleet repositioning, and the limited availability of alternative tonnage to replace Chinese-built ships. While the policy may offer a long-term boost to U.S. shipbuilding, current capacity constraints limit the potential for immediate benefits. Additionally, the risk of trade retaliation looms, particularly if other countries respond with countermeasures, further escalating tensions and uncertainty in global trade.
Here’s the visual dashboard for the dry bulk segment, showing the projected impact of the U.S. port fees on Chinese-built vessels in 2024:
Key Takeaways:
Supramax and Handysize vessels dominate both port call volume and cost exposure, with each class reaching approximately 1,900 port calls and a cost exposure of around $2.2 billion. These vessel classes are heavily relied upon across U.S. dry bulk ports, making them the most exposed to the potential financial burden from increased port fees.
Small vessels follow closely, with around 1,500 port calls and an estimated cost exposure of approximately $2.1 billion. Panamax vessels register roughly 900 port calls, which aligns with a projected cost exposure near $1.4 billion. Handymax vessels, though making fewer than 400 port calls, still face a significant impact, with an estimated exposure of around $430 million.
Post Panamax and Capesize vessels see the fewest U.S. port calls—both under 200—and are correspondingly less exposed, incurring cost estimates of about $165 million and $90 million, respectively. While these figures are relatively modest, they still reflect the financial burden these vessel classes may bear under the proposed U.S. fee structure.
In terms of sectoral impact, the dry bulk and agricultural sectors are particularly vulnerable. Grain exports, especially those shipped from the Gulf and Pacific Northwest, depend significantly on Handysize and Supramax vessels—both of which have a high proportion of Chinese-built tonnage. As port-related freight costs increase, U.S. agricultural commodities risk losing their price competitiveness in global markets, particularly in a high-cost environment where margins are already tight. In response, shippers may opt to avoid U.S. ports when operating Chinese-built vessels, which could further reduce available tonnage and increase freight market volatility.
Conclusion
In conclusion, the U.S. port fee proposal represents a major cost shock, potentially affecting over a third of the nation’s port call volume. The dry bulk sector appears particularly exposed, especially within the Handysize and Supramax segments due to their high utilisation rates and reliance on Chinese-built ships. While the measure aims to boost domestic shipbuilding, the short- to medium-term consequences may include rising freight rates, reduced export competitiveness, and shifts in trade routes. Without parallel investments in U.S. shipbuilding capacity and greater policy clarity, the risk of trade disruptions and inflationary pressures will persist.
Source: Signal Ocean
