USTR’s Proposed $1.5 Million Fee on Chinese Ships Could Have Broad Impact on U.S. Economy

In an interview with trade publication Port Technology International, Pillsbury partner David McCullough noted that the primary goal of the proposal is “to push back against China’s alleged dominance in international shipping while bolstering U.S. shipping capacity” and to “boost U.S. manufacturing–including shipbuilding.”

However, he noted that it is “significantly more expensive to build a vessel in the U.S. than in most other countries” due to the country’s stringent requirements for its flag vessels. Vessels must be built in the U.S., be U.S.-owned and have a certain percentage of U.S. crew and officers.

Pillsbury partner Benjamin Cote noted that “state subsidization and strategic approach by China” have positioned China to dominate key industries like maritime engineering and advanced manufacturing.

McCullough said that the proposed policy could “make U.S. goods more expensive, both domestically and internationally, with broad implications for the cost of goods.”

Cote agreed, noting that “there’s a consensus that the costs will ultimately be passed on to U.S. consumers.”

Nevertheless, “the requirement for U.S.-flagged, U.S.-built vessels might have long-term benefits if it leads to a revitalization of U.S. shipbuilding” and could eventually “create jobs and enhance maritime security,” McCullough said.