A New Bill Could Reshape U.S.-China Trade Relations

Priority for Vessels of the United States

CargoesPi shipping news: 23 December, 2024

The United States Congress is currently reviewing a new legislative proposal known as the “U.S. Ship Act.” If passed, this act could significantly impact container imports from China to the U.S.

Key Provisions of the U.S. New Act

All goods imported into the U.S. on vessels owned by Chinese companies or flying the Chinese flag will incur additional tariffs.
At least 10% of containerized imports from China must be transported on ships that are built in the U.S., operated by American crews, and flying the U.S. flag. This percentage will increase annually starting from the 5th year after enactment, eventually reaching 10% in the 14th year.
Non-compliance by importers will result in penalties calculated based on the freight cost difference between U.S. and foreign vessels.

Implications for Importers and Logistics Providers

The practical application of the 10% quota for freight forwarders and other logistics providers remains unclear. Shipping analysts, like Lars Jensen, warn of far-reaching impacts on U.S. imports from China, foreign container shipping companies, and U.S. exporters if the act becomes law.

Jensen notes that the act not only increases operational costs for Chinese shipping companies but also affects shipping alliances or vessel-sharing agreements (VSAs) with Chinese companies, such as CMA CGM and Evergreen.

Boosting the U.S. Maritime Industry

The bill's authors have explicitly stated that the goal is to make imported goods from China more expensive while revitalizing the U.S. merchant fleet. By introducing strict regulations and sustained investments, the act aims to enhance the commercial competitiveness of U.S.-flagged ships in international trade.

Currently, there are only about 80 ocean-going vessels flying the U.S. flag in international trade. Additionally, U.S. shipyards lack the capability to construct large ocean-going vessels, making this act a pivotal step toward strengthening the U.S. maritime sector.

Potential Global Effects

According to Jensen, the act's implications extend beyond Chinese companies. It could also impact other shipping companies that lease Chinese-owned vessels. Furthermore, the additional tariffs on goods imported via Chinese-owned or flagged ships could lead to increased shipping costs.

The act may also drive growth in transshipment hubs like Busan and Singapore, where shipping companies or clients could transfer Chinese cargo onto U.S. vessels to meet the 10% quota.

Additional Provisions

U.S.-flagged ships will be granted priority access to American ports, particularly during congestion or disruptions.
100% of U.S. government cargo will be transported on vessels that are U.S.-built, owned, and crewed, up from the current requirement of 50%.