The Office of the United States Trade Representative has requested comment on two proposed modifications to its actions targeting China’s shipbuilding policies and practices. USTR proposes to exempt certain vessels from service fees and also proposes to modify how the service fees are calculated. USTR also proposes to modify the actions relating to liquefied natural gas (LNG) exports. Comments are due by July 7, 2025.
Background
In April 2024, USTR initiated a Section 301 investigation of China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance. USTR published its Report on China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance on January 23, 2025, concluding that China had undertaken to dominate those sectors, and “severely disadvantag{ed} U.S. companies, workers, and the U.S. economy generally through lessened competition and commercial opportunities and through the creation of economic security risks from dependencies and vulnerabilities.”
On April 17, 2025, USTR determined to take action in this Section 301 investigation. The actions provided in Annexes I-IV of its April 17 determination will occur in two phases. For the first 180 days following the April 17 determination, applicable fees were set at $0. Then, beginning on October 14, 2025, fees would be assessed on: (i) vessel owners and operators of China based on net tonnage, (ii) operators of Chinese-built ships based on net tonnage or containers, and (iii) foreign-built carrier vessels based on capacity. In the second phase, beginning on April 17, 2028, USTR will begin requiring a certain percentage of LNG exports be shipped using U.S.-built vessels. A full breakdown of the actions determined by USTR in its April 17, 2025, determination can be found here.
Proposed Modifications to Annex III
Annex III of USTR’s April 17, 2025, determination provides for service fees on vessel operators of foreign-built vehicle carriers. Specifically, beginning October 14, 2025, on or before entry of a non-U.S. built vessel at the first U.S. port or place from outside the Customs territory of the United States, the vessel operator must pay “a fee in the amount of $150 per Car Equivalent Unit (CEU) capacity of the entering non-U.S. built vessel.”
USTR now proposes to change the basis of the fee from “CEU capacity of non-U.S. built vessels” to “net tons of non-U.S. built Vehicle Carriers.” USTR believes that the change to net tonnage is appropriate to address administrability of the fee-collection process and to avoid the potential for fee evasion. The “non-U.S. built Vehicle Carriers” terminology is also meant to provide greater certainty that Vehicle Carriers subject to Annex III includes Roll-On/Roll-Off Vessels.
Further, USTR proposes to add a provision clarifying that the fees imposed under Annex III do not apply to: (i) U.S.-owned or U.S.-flagged vessels enrolled in the Maritime Security Program, which consists of “a fleet of commercially viable, militarily useful merchant ships active in international trade” that is available to support the Defense Department during times of conflict or in other national emergencies; (ii) U.S. government vessels; and (iii) U.S. government cargo.
For these proposed modifications to Annex III, USTR is seeking comments on the potential impact of a fee based on net tons and the suggested amount of the fee, as well as implications of a targeted coverage provision for the Maritime Security Program and the suggested duration for such targeted coverage.
Proposed Modifications to Annex IV
Annex IV of USTR’s April 17, 2025, determination requires that exports of LNG be transported on vessels that receive a license and that a certain percentage of those exports be made by U.S.-built vessels. The U.S.-built vessel requirements for LNG exports become effective beginning April 17, 2028. However, paragraph (j) of Annex IV provides that if these U.S.-built vessel percentage requirements for LNG exports are not met, “USTR may direct the suspension of LNG export licenses until” such requirements are met. USTR now proposes to eliminate the provision providing for suspension of export licenses in order to alleviate concerns about potential negative impacts on the U.S. LNG sector.
Annex IV also requires that beginning April 16, 2028, the LNG terminal (facilities used for managing the import and/or export of LNG) report to the Department of Energy LNG shipments, and the percentage of LNG shipped, on U.S.-flagged, U.S.-built, and U.S.-operated vessels. Now, USTR proposes to shift this reporting requirement to vessel owners and operators.
USTR is asking the public to comment on the potential impact of eliminating the export license suspension provision of Annex IV; applying data collection requirements to vessel operators or owners, and if not, what entity is appropriate; and applying Annex IV restrictions to vessel owners and operators, and if not, what entity is appropriate.
Next Steps
Commerce’s notice establishes a deadline of July 7, 2025 for commenting on these proposed modifications. Interested parties may submit comments online via USTR’s electronic portal at https://comments.ustr.gov/s/ using docket number USTR-2025-0013.
Preparing Supply Chains
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