Trump: Chinese ships are turning back in Pacific Ocean

Trump: Chinese ships are turning back in Pacific Ocean

The newly reintroduced SHIPS for America Act, first introduced in the last Congress in December, has sparked renewed debate in the shipping industry. The bill, which has broad bipartisan support, aims to revive US shipbuilding by imposing port fees on non-Chinese owners ordering ships from Chinese yards and mandating cargo preferences for US-built vessels.

Key provisions of the SHIPS Act include:
- Port Fees for Non-Chinese Owners: Non-Chinese owners ordering ships from Chinese yards will face US port fees. The bill also introduces a "penalty tax" for Chinese ships and operators, as well as non-Chinese operators that order at foreign shipyards of concern.
- Cargo Preferences: The bill requires that an escalating percentage of US imports from China and exports of LNG and crude oil be transported on US-built ships. For US crude exports, 3% of volumes must be exported on US-flagged tankers in the first four years, increasing to 10% by the fourteenth year. For LNG exports, the percentages range from 2% to 15% over a 22-year period.

Critics argue that these measures could increase shipping costs and potentially damage trade relations between the US and China. Gordon Sheerer, a senior advisor at Poten & Partners, highlighted the challenges of meeting these requirements, particularly for LNG shipping, noting that the US has not built an LNG carrier since the 1970s and that US-built vessels would be significantly more expensive than those built in Asia.

The SHIPS Act, if passed, would add another layer of protectionism to US trade policies, which have already been strained by tariffs and the USTR port fee decision. The bill has a strong chance of becoming law in today’s political climate, given its bipartisan support and backing from the Trump administration.

References:
[1] https://www.lloydslist.com/LL1153328/New-version-of-US-SHIPS-Act-targets-owners-ordering-Chinese-newbuilds