President Trump issued April 9 an executive order that directs nearly two dozen actions by federal agencies, including some that could increase trade-related costs, as part of an effort to revitalize the U.S. shipbuilding industry.
“The commercial shipbuilding capacity and maritime workforce of the United States has been weakened by decades of government neglect,” the EO states, “leading to the decline of a once strong industrial base while simultaneously empowering our adversaries and eroding United States national security.” In response, the EO directs the submission within 210 days of a maritime action plan that reflects a variety of actions laid out in the EO, including the following.
Tariffs. The Office of the U.S. Trade Representative has proposed to impose fees and/or service restrictions on cargo ships operated by or built in China. According to press reports, USTR is considering less-burdensome measures after critical comments from trade and industry groups, with a final decision expected sometime this month.
The EO not only appears to leave open all options laid out in USTR’s proposal but also directs the agency to consider imposing import tariffs on (1) ship-to-shore cranes manufactured, assembled, or made using components of Chinese origin, or manufactured anywhere in the world by a company owned, controlled, or substantially influenced by a Chinese national, and (2) other cargo handling equipment.
Fees on cross-border imports. “To prevent cargo carriers from circumventing the Harbor Maintenance Fee on imported goods through the practice of making port in Canada or Mexico and sending their cargo into the United States through land borders,” the EO directs the Department of Homeland Security to take all necessary steps, including proposing new legislation, to:
- require all foreign-origin cargo arriving by vessel to clear the U.S. Customs and Border Protection entry process at a U.S. port of entry for security and collection of all applicable duties, customs, taxes, fees, interest, and other charges; and
- ensure that any foreign-origin cargo first arriving by vessel to North America clearing the CBP process at an inland location from the country of land transit (Canada or Mexico) is assessed applicable customs, duties, taxes, fees (including the HMF), interest, and other charges plus a 10 percent service fee for additional costs to CBP, so long as the cargo being shipped into the U.S. is not substantially transformed from its condition at the time of arrival into Canada or Mexico (as determined by CBP).
Enlisting others. The EO directs USTR to engage “treaty allies, partners, and other like-minded countries around the world” concerning their potential imposition of similar tariffs and/or fees.
U.S. ships. The EO states that within 180 days the Department of Transportation must deliver a legislative proposal providing incentives that will (1) grow the fleet of U.S.-built, -crewed, and -flagged vessels that serve as readily-deployable assets for national security purposes and (2) increase the participation of U.S. commercial vessels in international trade.
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