In late-June, the World Shipping Council warned that there were "major problems" with several key aspects of planned fees against Chinese-owned and operated vessels calling U.S. ports. Although the fees have now been in effect since October 14, many of those problems flagged by the WSC remain, with owners and operators continuing to press the Trump administration for much-needed answers.
The U.S. Trade Representative released its notice of action announcing the port fees on April 17, which laid out plans to have U.S. ports start charging fees to Chinese-linked vessels in mid-October, and then feed that money back into the long-neglected U.S. shipbuilding industry. The 42-page notice included a timeline for how and where the fees would be assessed once they came into force, albeit with several conflicting details surrounding the scope of "Chinese-linked" ownership, vessel eligibility, and fee collection mechanisms.
"It had a number of inconsistencies and ambiguities that the industry has been working through since April," said Holland & Knight maritime attorney Sean Pribyl, while speaking at a panel discussion at Seattle's One Ocean Week on October 21.
In the lead-up to the October 14 implementation, there was optimism throughout the maritime industry that the USTR would offer some sort of guidance to address these ambiguities, Pribyl noted. But when that date came and went and no such clarity was given, operators were left to interpret the rules on their own, despite not fully knowing which ships might be subject to penalties, how to account for joint ventures or partial Chinese ownership, and even whether they could legally pass those costs on to customers without violating federal maritime or trade regulations.
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On top of that, the USTR failed to establish a dedicated maritime trust fund to ensure the fees could be set aside for domestic shipbuilding. As a result, all fees that have been collected so far have gone straight into the general treasury, where it's much harder to track and allocate dollars intended for specific programs.
So, what was it that fueled what's been a decidedly chaotic rollout? Part of the issue is that the USTR isn't a maritime agency, Pribyl said, and hasn't historically been responsible for regulating ports or shipping.
"They just jumped right in, and we're dealing with the after-effects of that," he explained.
And while some have posited that the USTR might have made the fees intentionally ambiguous to give them wiggle room with how they're collected, "that's giving them a lot of credit," Pribyl asserted. Rather, he theorized, it seems likely that they were instructed to enact the fees by the White House and simply rushed them out.
As for the months of unanswered questions from operators, Pribyl said that many of those queries have likely been slowed by the need to run them through several layers of approvals from top-level officials in the White House. Also not helping matters was the government shutdown that started just two weeks before the fees took effect, he added.
Moving forward, Pribyl expects the USTR to take a "wait and see" approach, where the agency will keep an eye on the amount of money that gets collected, as well as how operators are interpreting the rules as written.
"They're going to be tracking this to see if it's a political win," he clarified.