Hey,

China builds roughly 70% of the world's container ships. It operates some of the largest carriers on the planet. It controls key port infrastructure across Asia, Africa, and Europe. For decades, the U.S. watched this happen. In 2025, it decided to do something about it, and the tool it chose was a port fee.

To understand what's happening, you need to start with the legal mechanism. Section 301 of the Trade Act of 1974 gives the U.S. Trade Representative the authority to investigate and respond to unfair trade practices by foreign countries — and to impose fees, tariffs or other measures in response.

In April 2025, following a year-long investigation into China's maritime, logistics, and shipbuilding sectors, the USTR announced a new fee structure targeting Chinese-built and Chinese-operated vessels calling at U.S. ports. The fees entered into force in October 2025 and are structured across four non-cumulative categories — what the USTR calls Annexes.

Annex I targets vessels owned or operated by Chinese companies. From October 2025, the fee was set at $50 per net ton per U.S. voyage. From April 2026, it rises to $80 per net ton. By April 2028, it plateaus at $140 per net ton. The fee applies up to five times per year per vessel.

Annex II targets vessels built in China but operated by non-Chinese companies. The fee is calculated as the higher of either a per-net-ton charge or a per-container charge — starting at $18 per net ton or $120 per TEU discharged, rising to $80 per net ton or $153 per TEU from April 2026, and plateauing at $33 per net ton or $250 per TEU by 2028.

Annex III targets foreign-built vehicle carriers — ro-ro ships — with a flat fee per Car Equivalent Unit.

The fees are not cumulative: a vessel falls under one Annex only, determined by its ownership and construction origin. A vessel built in China and operated by a Chinese company falls under Annex I. A vessel built in China but operated by a European carrier falls under Annex II. The key principle: if your vessel has a Chinese nexus — either in ownership or construction — and it calls at a U.S. port, you pay.

Why does this matter? Because 70% of global container ship capacity is of Chinese construction. The Transatlantic and Transpacific trades are slightly better positioned — around 21% of capacity on those routes is China-built — but the exposure across the industry is significant. And the fees are designed to escalate every year, building financial pressure on carriers to restructure their fleets and reduce their dependence on Chinese shipyards.

The fee structure creates a clear hierarchy of exposure among the world's major carriers — and it's revealing about which business decisions of the last decade now look like liabilities.

The hardest hit: COSCO and OOCL. China's state-owned carrier COSCO Group — which operates both COSCO and OOCL — faces the most severe impact by a significant margin. Alphaliner calculates that COSCO alone could incur $1.53 billion in USTR fees in 2026, representing more than half of all fees generated under the program. OOCL adds an estimated $654 million. Together, HSBC projects these fees could erode up to 74% of COSCO's projected 2026 operating profit and 65% of OOCL's. For context: these are not marginal costs. They are existential pressures on profitability.

The significantly exposed: ZIM, ONE, and CMA CGM. These carriers rely heavily on chartered tonnage from Chinese owners — which means their vessels fall under the higher Annex I fees even though the carriers themselves are not Chinese. Alphaliner calculates ZIM faces approximately $510 million in exposure, ONE around $363 million, and CMA CGM around $335 million. Their mitigation options are more limited than carriers with owned fleets, because restructuring chartered tonnage requires renegotiating contracts they don't fully control.

The best positioned: Maersk and Hapag-Lloyd. Both carriers benefit from two structural advantages. First, their Gemini Cooperation alliance is built around reliability and network efficiency — not fleet scale — which means fewer Chinese-built vessels on U.S. routes. Second, Maersk has proactively redeployed Korean-built ships on transpacific routes and is retrofitting chartered vessels to improve fleet efficiency. Alphaliner estimates Maersk's exposure at just $17.5 million and Hapag-Lloyd's at $105 million — a fraction of the pressure facing their Chinese competitors.

The completely exempt: HMM and Evergreen. South Korea's HMM and Taiwan's Evergreen have no vessels subject to USTR fees under the current structure. Their fleets are built in Korean and Taiwanese yards — a decision that now looks remarkably well-timed, even if it wasn't made with U.S. port fees in mind.

The strategic responses across the industry have been telling. The Premier Alliance — ONE, HMM, and Yang Ming — restructured its Mediterranean Pacific South 2 service specifically to remove Chinese-built vessels from U.S. port rotations. CMA CGM and the Ocean Alliance are exploring transshipment through Canada, Mexico, and Caribbean hubs as alternative gateway strategies that avoid direct U.S. port calls with exposed vessels. Meanwhile, carriers continue placing newbuild orders at Chinese shipyards for non-U.S. trades — a signal that Chinese construction remains economically attractive for most of the global network, just not for the American market specifically.

In November 2025, the USTR fees were suspended until November 2026 as part of broader trade negotiations between the U.S. and China. Carriers that had incurred fees between October 14 and November 9, 2025 received no refund — but from November 10 onward, no fees were owed.

This might sound like good news. It isn't, at least not straightforwardly.

The suspension has created a new kind of operational problem: strategic uncertainty at scale. Carriers that restructured their fleet deployments to minimize fee exposure now don't know whether to maintain those reconfigurations or revert to more efficient pre-fee network designs. Carriers that signed new charter agreements specifically to avoid Chinese-built tonnage on U.S. routes are now paying a premium for non-Chinese vessels that may not be strictly necessary — for now. Port authorities, logistics operators, and importers who adjusted their supply chain configurations are in the same position.

The fundamental issue is that the suspension resolves nothing structurally. The underlying investigation, the fee framework, and the political intent behind the USTR action remain intact. The fees could resume in November 2026 at higher rates than they were at suspension — because the escalation schedule continues regardless of whether collection is active. What cost $50 per net ton in October 2025 is scheduled to cost $80 per net ton from April 2026 and $140 per net ton by 2028. The clock is running even when the meter is paused.

Planning in an environment where the rules can change every few months carries a real cost — not just in operational adjustments but in the inability to commit to long-term fleet and route strategies with confidence. That cost doesn't appear on any invoice. But it is being paid.

The USTR fees illustrate two dynamics that extend well beyond the maritime sector.

The cost of optimizing only for price. For two decades, the shipping industry made rational decisions: Chinese shipyards offered the best combination of price, quality, and delivery time, so carriers ordered from China. That logic was sound in isolation. What it didn't account for was the possibility that the country of construction would become a geopolitical variable with direct financial consequences. The same pattern has played out in semiconductors, in pharmaceuticals, in rare earth materials, and in energy — industries that optimized for cost concentration and are now paying the price for supply chain exposure. The shipping industry is not unique in this. It is simply the latest example of a lesson that keeps being learned the hard way.

Regulation as a strategic variable. The carriers best positioned to navigate the USTR fees are not necessarily those with the most efficient operations or the largest fleets. They are the ones that either happened to diversify their fleet origins for other reasons, or that moved quickly enough when the regulatory signal appeared to restructure before costs materialized. Going forward, the country of construction, the ownership structure, and the flag of a vessel are no longer purely operational considerations. They are strategic ones — with regulatory, financial, and geopolitical dimensions that need to be modeled alongside fuel consumption and port call efficiency.

That is a genuinely new requirement for an industry that has spent most of its history focused on the physical movement of cargo. The companies that build that analytical capability will have a structural advantage over those that don't.

If you work in shipping, freight forwarding, or logistics procurement, the USTR fees are not a problem for carriers to solve on their own. They are your problem, because every cost the carriers absorb will eventually reach your invoice, your contract negotiations, and your client’s expectations. Understanding the mechanism before the surcharge arrives is the difference between reacting and anticipating.

Sunday Compass exists for exactly this reason. Not to summarize what happened yesterday, but to give you the framework that makes the next development — whatever it is — easier to understand, easier to explain, and easier to act on.

That's what separates a professional who knows the industry from one who truly understands it.

Talk soon,

Fer

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