SASKATOON — Canada’s ports will become even more crowded if the United States proceeds with proposed actions against China’s shipbuilding sector, say industry officials.
On April 17, 2024, the U.S. Trade Representative (USTR) initiated an investigation at the behest of five U.S. trade unions into China’s dominance of the maritime, logistics and shipbuilding sector.
The investigation found that China’s targeting of the sector was unreasonable and restricted U.S. commerce.
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In response, the USTR is proposing assessing fees on Chinese-built vessels entering U.S. ports of up to US$1.5 million per entrance.
The proposal is open for public comment until a March 24 hearing, after which U.S. Donald Trump’s administration is supposed to decide if the new fees will be imposed.
Peter Friedmann, executive director of the Agriculture Transportation Coalition, said the proposal would force U.S. shippers to consider alternative routes for their commodities if it is implemented.
“We will ship more of our grain by train right up to Vancouver or out to Halifax or up to Prince Rupert and then you get a Chinese built ship that will come in and take it from those ports,” he said during the U.S. Department of Agriculture’s Agricultural Outlook Forum 2025.
It wouldn’t be small volumes because China builds 83 per cent of all the big ships and container ships in the world, he noted.
Cary Davis, president of the American Association of Port Authorities, said he “is in lockstep” with Friedmann’s views on the USTR proposal.
“I don’t disagree with any of your assessment that it hurts American businesses and it’s ultimately a tax that will be passed on to American businesses,” he said.
“I think you’re spot on. Cargo will be diverted to Canada and Mexico if there’s a tax on these Chinese ships.”
He thinks the policy would be particularly detrimental to agricultural shippers because 40 per cent of the port calls affected by the proposed tax would by dry bulk. The other big categories would be 35 perc ent liquid bulk and 20 per cent container ships.
The World Shipping Council, which represents ocean carriers, is also expressing concern.
It said the fees will “reduce the competitiveness of U.S. exports, raise prices for U.S. consumers and divert port traffic to Canada and Mexico,” according to a Wall Street Journal article.
Friedmann doesn’t know how the USTR proposal will sit with newly elected Trump because it was a proposal from his predecessor’s administration.
Trump may have provided the answer in his March 4 speech to a joint session of Congress where he announced plans to create a new office of shipbuilding within the White House.
“We used to make so many ships,” he said.
“We don’t make them anymore very much, but we’re going to make them very fast, very soon.”
The Wall Street Journal reports that the Trump administration is preparing an executive order that includes 18 measures to resurrect the moribund U.S. shipbuilding industry.
A draft summary of the order includes measures that have been circulating in Washington for several years.
“These include pending legislation in Congress aimed at restoring U.S. shipbuilding to proposals floated by the U.S. Trade Representative’s office that would charge fees on Chinese-flagged or Chinese-built ships calling at U.S. ports,” stated the newspaper article.
Davis said there are estimates that the USTR’s fee proposal would raise about $10 billion, which would not be enough to recapitalize the U.S. shipbuilding sector.
He thinks the Ships for America Act, which is proposed legislation aimed at addressing gaps in shipbuilding, maritime workforce development and the modernization of the U.S. commercial fleet, is a far better alternative to what the USTR is proposing.
Friedmann noted that the USTR proposal includes a requirement that eventually up to 15 per cent of U.S. exports will have to travel on U.S. built ships with U.S. maritime labour.
“I’ll tell you, U.S. maritime labour costs a lot more than labour on ships now with a Filipino captain and a Bangladesh crew,” he said.
Friedmann said the USTR’s 182-page report has many U.S. shippers “up in arms,” including groups such as the National Retail Federation and the American Apparel & Footwear Association.
He does not think the proposal will remain intact because the results would be damaging for the U.S. economy.
Friedmann said the USTR is supposed to be a trade advocate, but Katherine Tai, who served as the USTR between March 18, 2021, and Jan. 20, 2025, was the opposite.
He said the former labour union lawyer was anti-trade and pushed a protectionist agenda. The tax on Chinese vessels was her “parting gift” for the incoming Trump administration, he added.
Friedmann said the other major threat facing U.S. agriculture shippers is the consolidation happening in the container shipping industry.
He noted that a lot of bulk agriculture commodity business is shifting to containers because that’s what overseas customers want.
Exporters who want to ship direct from the west coast of the U.S. and Canada to Europe, the Mediterranean Basin or the Middle East only have one shipping line they can use, said Friedmann.
He believes more consolidation is on the way as the second and fifth largest carriers work together to enhance efficiencies.
The shipping industry is regulated by the Federal Maritime Commission, but it has never broken up a carrier.
“Even if some of us believe there should be a little intervention, it’s not going to happen,” said Friedmann.
