The Office of the U.S. Trade Representative has announced the results of a Section 301 investigation concluding that China’s acts, policies, and practices in the maritime, logistics, and shipbuilding sectors are actionable under that law.
USTR determined that China’s targeting of these sectors for dominance (1) is unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, lessens competition, and creates dependencies on China, increasing risk and reducing supply chain resilience, and (2) burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.
USTR said its determination provides “a basis for finding that responsive action is appropriate” but that any such decision “would be considered at a later date in the next stage of the investigation.” As such, it could be used to further increase tariffs on imports from China, as President Trump has threatened to do early in his administration.
The petitioners originally requested that if USTR’s determination was affirmative the following measures be taken.
- imposing fees on vessels built in China that dock at U.S. ports, with higher fees for larger, heavier, and newer ships and fee increases at regular intervals (the petition mentioned a “hypothetical” fee of $1 million for a 20,000 TEU ship, which it said would not meaningfully increase costs for U.S. consumers)
- using proceeds from those fees to establish a domestic shipbuilding industry revitalization fund, with priority for cargo, container, and tanker ships
- taking actions to support stronger demand for U.S.-built vessels, such as directing U.S. Customs and Border Protection to rescind rulings creating exemptions to the Jones Act, ensuring that cargo preferences are fully enforced and strengthened, and requiring gas and oil exports as part of foreign aid or trade agreements to occur on U.S.-built tankers
- negotiating with Japan, Korea, and other major shipbuilding countries to address concerns about their own government support programs and coordinate measures to address China’s unfair practices
However, Section 301 gives USTR the power to respond to unfair trade practices by imposing tariffs as well, and the Trump administration will not be restricted to the petitioners’ requests when considering what if any measures to take in response to USTR’s finding.
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