China imposes retaliatory port fees on US-linked ships

Post by : Meena Rani

The New Port Fee Wars: China’s Retaliatory Charges vs U.S. Ship Levies

In October 2025, port call charges crossed from commercial backwaters into the diplomatic frontlines. China initiated a set of “special port charges” targeting U.S.-linked vessels—ships built, flagged, owned, operated, or controlled by U.S. interests—as retaliation against U.S. plans to impose fees on Chinese ships. The move marks a sharp escalation in maritime trade policy, turning ports into arenas of economic diplomacy, and shipping lines into unwilling chess pieces. Understanding how these fees work, who they target, what the exemptions are, and how the market will respond is vital for owners, charterers, insurers, and regulators alike.

Origins: Why This Tit-for-Tat Strategy Emerged

The backdrop is a policy escalation by the U.S. under Section 301, where Chinese-owned or -built vessels would be subject to additional port charges when calling U.S. ports. In response, China issued a countermeasure: starting October 14, 2025, U.S.-related vessels entering Chinese ports must pay special port fees per net ton, structured in phased increments over four years. This symmetric structure tries to mirror the U.S. scheme, but with strategic differences in scope and enforcement.

In effect, both countries are applying port access as a lever in broader trade and geopolitical contestation. Shipping firms, commodity traders and energy flows are caught in the crossfire.

What China’s Special Port Fee Regime Entails

Scope of Coverage: More Than Just U.S. Flags

China doesn’t restrict the fees purely to U.S. flagged ships. Instead, the policy defines a broad “U.S. nexus” concept:

• Vessels owned or operated by U.S. enterprises, organizations or citizens

• Ships where U.S. entities hold 25% or more equity, voting right or board seats

• U.S.-flagged or U.S.-built vessels

This expansive definition means that ships owned or financed by U.S. institutions—even if registered elsewhere—may be liable. Analysts warn it casts a wide net over fleets with U.S. capital participation.

Fee Schedule and Escalation

The special port charge is structured in phases:

• From October 14, 2025: 400 RMB per net ton

• From April 17, 2026: 640 RMB per ton

• From April 17, 2027: 880 RMB per ton

• From April 17, 2028: 1,120 RMB per ton

Each voyage is charged only once (i.e. at the first Chinese port accessed), and vessels will be liable for the fee on no more than five voyages per year.

If a vessel fails to declare or underreports its U.S. nexus, port authorities may delay clearance, impose penalties or detain the ship.

Exemptions and Special Cases

To moderate impact and protect domestic interests, China carved out specific exemptions:

• Vessels built in China are exempt

• Empty ships entering Chinese shipyards solely for repair are exempt

• Other categories determined by local port authorities may also be exempt

These carve-outs limit applicability but also create ambiguity and room for dispute over eligibility.

How the U.S. Scheme Works (for Context)

The China response mirrors the U.S. imposition of port-entry service fees on Chinese-linked vessels, also effective October 14, 2025. Under the U.S. scheme:

• Chinese-built, Chinese-owned or operated vessels pay $18 to $50 per net ton

• Certain types of ships (e.g., vehicle carriers) may face higher surcharges

• Each vessel is charged a maximum of five port visits per year

The Chinese move sought to match both timing and escalation structure, creating symmetry in maritime policy.

Immediate Market Impacts and Shipping Responses

Route Adjustments and Bunkering Strategy Shifts

Carriers may avoid Chinese ports altogether or minimize Chinese calls during impacted voyages. Some will reroute to alternative ports, incurring additional voyage miles and fuel costs.

Bunker and fuel suppliers in ports adjacent to China could see demand spikes as vessels delay calling China or bunker elsewhere before entering Chinese waters.

Contractual and Legal Risks

Charterparty clauses concerning “port charges,” indemnities, and force majeure will be tested. Who bears the cost—owner or charterer—may vary depending on contract terms and local law.

Vessel owners could face penalties or denied entry if they misdeclare nexus status or fail to pre-report ownership structures to port authorities.

Financial and Insurance Implications

Ships subject to these fees will see increased voyage costs, compressing margins. Underwriters and financiers may adjust risk assessments for vessels flagged or financed in U.S.-linked jurisdictions.

Some operators may consider restructuring ownership, charter arrangements or flag transfers to avoid exposure.

Equity and Capital Exposure

Because China’s definitions include equity stakes (≥ 25%) and board representation, vessels funded by U.S. institutional capital—even if flagged elsewhere—may be drawn into liability. Investors will need to assess whether their shipping stakes cross the threshold.

Longer-Term Geopolitical & Strategic Dimensions

Escalation Risk in Maritime Policy

This tit-for-tat policy signals that port access is now a strategic battleground. Future disputes could see further charges, restrictions, or even bans targeted at shipping sectors (e.g. LNG exports, crude trade, container lines).

Fragmentation of Shipping Rules

If more states adopt port-levy retaliation, the shipping world could fracture into spheres of influence, complicating operational planning, compliance and flag decisions.

Incentives for Flag Transfers or Ownership Reorganization

Owners may register vessels under neutral or friendly flags and restructure equity to avoid nexus thresholds. This could drive a rush of flag changes or “nominee” ownership setups.

Impact on Global Trade Flows

Chinese imports remain large, especially crude, coal, grains and bulk commodities. Shipping costs and deterrents to calling Chinese ports could influence sourcing decisions, shift trade corridors and affect commodity sourcing strategies.

Steps Carriers, Owners and Charterers Should Take Now

1. Review ownership & capital structure:
   Assess if any vessels might cross China’s U.S. nexus thresholds via equity or control ties.

2. Flag and registry evaluation:
   Consider reflagging or ownership changes to jurisdictions outside U.S. nexus definitions.

3. Contract audits:
   Revisit charterparty allocations of port charges, indemnities, abnormal cost clauses, and risk sharing.

4. Pre-reporting & disclosures:
   As China requires advance vessel ownership and nexus reporting (e.g. 7 days before arrival), ensure timeliness and correctness of declarations.

5. Voyage planning optimization:
   Analyze routing alternatives to reduce Chinese port calls, maximize bunkering before Chinese ports, and avoid multi-China leg voyages in a single trip.

6. Legal recourse and claims readiness:
   Document cost impacts and be prepared to dispute or renegotiate based on mis-characterization or excessive fees.

7. Insurance and financial stress tests:
   Model increased port costs, account for refused entry risk, and include unexpected fee exposure in financial planning.

Risks and Uncertainties to Watch

• Interpretation ambiguity: How local authorities define U.S. nexus, control or equity involvement remains fluid, creating legal uncertainty.

• Implementation inconsistency: Port to port enforcement may vary; some Chinese ports may interpret rules loosely, others strictly.

• Retaliatory escalation: The U.S. or other countries may further escalate with additional maritime or trade measures.

• Impact on non-U.S. investors: Investments by U.S. capital in global shipping may suffer unintended exposure, even when no U.S. flag or operation is involved.

• Trade treaty or WTO disputes: Whether these unilateral port fees violate WTO or bilateral maritime treaties may be contested in legal forums.

Frequently Asked Questions (FAQ)

Q1. Which vessels will be charged under China’s special port fees?
Vessels built in the U.S., flagged U.S., owned or operated by U.S. entities, or where entities have ≥ 25% equity, board or voting ties to U.S. interests.

Q2. How much is the fee and when does it rise?
400 RMB per net ton from October 14, 2025; rising to 640 RMB in April 2026; 880 RMB in April 2027; and 1,120 RMB in April 2028.

Q3. How many voyages per year will be charged?
Max up to five voyages per vessel per year.

Q4. Will the fees be applied multiple times if vessel calls multiple Chinese ports on same voyage?
No. The charge is applied only at the first Chinese port of call in a voyage.

Q5. Are there exemptions?
Yes — ships built in China, empty repair-only journeys, and some other categories may be exempt.

 

Disclaimer
This article is for informational purposes only. It does not constitute legal, financial or commercial advice. The measures described reflect public announcements as of October 2025 and may evolve. Stakeholders should consult maritime law experts, port authorities, and charterers for guidance when assessing risk, contracts or compliance strategies.

China port fees, USTR port charges, Sino-US maritime tensions, shipping costs, countermeasure, port regulation, vessel finance, shipping law