Proposed US levies on Chinese ships opposed

US agricultural commodities groups registered their opposition to a government proposal to levy large fines and restrictions on exporters that use Chinese-made ships, which they said would have an outsized impact on the grain, feed and oilseeds industries, and encouraged alternatives to boost US shipbuilding in comments submitted to the US Trade Representative (USTR).

Comments were filed by the National Grain and Feed Association (NGFA), North American Export Grain Association (NAEGA), the National Oilseed Processors Association (NOPA), US Wheat Associates (USW) and National Association of Wheat Growers (NAWG), responding to a USTR Section 301 investigation into China’s dominance over global shipping and shipbuilding.

Proposed penalties include fines of up to $1.5 million for each Chinese-made ship that enters a US port, up to $1 million per port call for Chinese operators, and up to $1 million for operators with orders from Chinese shipyards. The USTR’s plan would also set minimum amounts that carriers must export on US-built, US-flagged vessels.

It is estimated that an additional $1 million fee on vessels carrying agricultural exports would increase costs of most shipments between $15 and $40 per tonne, which equates to about $0.50 to $1.25 per bushel. Grain and oilseed exports support 450,000 American jobs and add $174 billion to the US economy, according to the groups.

“Though well intentioned, this proposal threatens to impose significant costs on US grain and oilseed exporters and erode America’s competitiveness in the international market,” said Mike Seyfert, president and chief executive officer of the NGFA. “If enacted, this proposal would effectively eliminate half of the global bulk fleet that we need to export almost one-third of grains and oilseeds that are produced in America. That puts US agriculture at a considerable competitive disadvantage in global markets. We are already seeing disruptions in the marketplace since the proposal was put forward, including lost sales and difficulty contracting ships.”

Of the roughly 21,000 vessels in the world’s bulk shipping fleet, nearly 50% were made in China. Only five ships currently operating in the global fleet were built in America, or 0.2%. Container vessels, which were used to export about $9 billion of grain and oilseeds in 2024, are also important to agricultural shippers and would be severely affected by the proposal, Seyfert said.

The NGFA asked the administration to consider other ways to promote the US maritime industry, such as shipbuilding grants, tax credits and reduced regulations. If the USTR moves forward with proposed penalties, the NGFA said it wants agricultural commodities exempted.

“Without an exemption we could see a significant drop in corn, soybean and wheat exports,” Seyfert said. “That jeopardizes the $65 billion trade surplus America enjoys on US grains and oilseeds and hurts all of US agriculture, from the exporters to the farmers.”

Devin Mogler, president and CEO of NOPA, emphasized that the US grain and oilseeds industry relies on a competitive, efficient and reliable global shipping in an increasingly competitive global export market. He said it is crucial that policies increase, and not restrict, shipments of US commodities.

“While we support efforts to promote US shipbuilding, the proposed penalties would place a disproportionate burden on American farmers, processors and exporters, limiting access to essential shipping capacity and driving up costs ultimately to be shouldered by hard-working American farmers,” Mogler said. “NOPA urges the administration to explore alternative solutions, such as targeted incentives for domestic shipbuilding, rather than imposing penalties that could disrupt supply chains and harm the entire agricultural sector." 

Grain and oilseeds markets are highly competitive, low margin and price sensitive, said Alejandra Castillo, president and CEO of the NAEGA.

“We are concerned that implementation of the proposed actions would present irreversible harm to our bulk agricultural exports and erode the strong trade surplus we now enjoy,” Castillo said. “We strongly encourage the administration to continue to explore alternative responses to China’s targeting of maritime, logistics and shipbuilding sectors in ways that promote US industry and avoid harm to US farmers, producers, exporters, and American families.”

The US wheat industry and its customers are heavily dependent on ocean-going vessels, especially dry bulk carriers, and exports are vital to this sector, the USW said. About half of the US wheat crop is exported each year, including around 90% of wheat grown in Washington, Oregon, Idaho, and parts of Montana.

“Lost orders for US wheat would also hit barge and rail companies, local grain elevators, US farmers, and their communities,” the USW and NAWG said. “USW and NAWG believe such losses are unthinkable for wheat farmers that are already facing tight margins and unfair trading practices around the world."

Source: World Grain