By Louis Martel*
The United States has a long history of implementing protectionist trade policies, often realizing in hindsight that such measures ultimately hurt Americans. The latest example is the Trump administration’s proposal to impose exorbitant port fees on Chinese-built vessels that dock at U.S. ports – a shortsighted policy that is poised to have disastrous consequences on Canadian exporters and will create significant challenges to the American economy as well.
In March 2024, Former President Joe Biden called on the United States Trade Representative (USTR) to launch an investigation into China’s unfair trade practices in the shipbuilding, maritime, and logistics sectors. The petition that launched the investigation proposed corrective actions, including a $1 million USD fee per ship visit on all Chinese-built vessels that dock at U.S. ports.
Now, just a few weeks after President Trump was sworn in, that proposal is back with a vengeance. The USTR is now contemplating fees of up to $1.5-million USD for any Chinese-built ship that docks in the country, and a sliding-scale fee of up to $1 million USD based on the percentage of vessel orders that operators place in Chinese shipyards. Combined, these charges could result in fees ranging from $2.5 million USD (over $3.5 million CAD) to $4 million USD per vessel entry at a U.S. port.
Continental impact of fees on Chinese-built vessels
As currently drafted, the new rules would have a devastating impact on companies that rely on marine transportation to ship essential cargo. Indeed, nearly half of the ships operated on the St. Lawrence and the Great Lakes by the largest shipowners are built in China. Along the Atlantic and Pacific coasts, that proportion is slightly higher among short-sea shipping vessels.
In Canada, this is partly the result of the National Shipbuilding Strategy, launched about 15 years ago to refurbish the government’s fleet of military vessels, icebreakers, and ferryboats. This policy encouraged commercial shipowners to acquire vessels abroad so that Canadian shipbuilders could respond to the government’s needs.
But that’s not the only factor. Chinese shipbuilders are gaining global market shares rapidly. According to the Veson Nautical 2024 annual review, Chinese shipbuilders received about three quarters of the world’s bulk carrier orders last year.
That means that if the U.S.’s projected port fees were to come into effect, shipping vital commodities on vessels across key trading routes from Chicago to Montreal, Thunder Bay to Detroit, Victoria to Long Beach and Baltimore to Halifax, is now under serious threat. And this is a problem you should be worried about, whether you live in Canada or in the United States.
If implemented, the port fees will:
- Disrupt critical supply chains by making short-sea shipping economically unfeasible and many products more expensive.
- Shift cargo to land-based transportation, increasing congestion on already overburdened railways and highways, emitting more greenhouse gases.
- Punish Canada unfairly, as nearly 45% of Canadian Great Lakes fleet ships were built in China due to past trade policies that encouraged foreign ship purchases.
Rather than indiscriminately penalizing all Chinese-built ships, the USTR should make the necessary distinctions to protect essential local supply chains and target only the intended problem – Chinese state-backed shipping dominance – while protecting North American trade corridors.
If left unchecked, the Trump administration’s port fees will not only adversely affect the viability of our fleets, they will drive up the cost of doing business across key industries such as energy, manufacturing, and agriculture.
The Canadian government needs to treat this proposal as a direct threat to Canada’s economy – because that is exactly what it is. It must be prepared to respond with countermeasures, including targeted tariffs on key U.S. exports and diplomatic efforts to unite our allies against unfair trade policies.
History has repeatedly shown that blunt trade measures, such as tariffs or port fees, rarely achieve their intended goals without causing significant collateral damage. Rather than repeating past mistakes, the U.S. should recalibrate its approach to ensure that allies like Canada are not inadvertently caught in the crossfire of its economic disputes with China. If the President refuses to reconsider, then Canada must take a stand and fight back.
(Photo by David Schauer of CSL vessel calling at the Port of Duluth, Minnesota)
*Louis Martel is President and Chief Executive Officer of CSL Group.