When it comes to global shipping, few voices carry as much weight as BIMCO. Representing over 2,100 members across 130 countries and 63% of the world’s merchant fleet by deadweight tonnage, BIMCO is the shipping industry’s go-to authority. So, when they speak, the world listens. And right now, they’re sounding the alarm over the Trump administration’s proposed tariffs on ships built in China, warning of a storm that could sink more than just vessels.
What’s the fuss about?
The U.S. Trade Representative’s office has floated a plan to impose hefty fees on ships built in China entering American ports. The proposal, part of a broader Section 301 investigation into China’s dominance in maritime, logistics, and shipbuilding, aims to curb Beijing’s growing influence. But according to BIMCO, the plan is less of a strategic masterstroke and more of a self-inflicted wound for the U.S. economy.
In a sharply worded letter to U.S. Trade Representative Jamieson Greer, BIMCO’s Deputy Secretary General, Lars Robert Pedersen, laid out the case against the tariffs. The gist? Higher costs for American consumers, fewer jobs in U.S. ports, and a potential blow to the country’s energy exports. Oh, and it might not even dent China’s shipbuilding dominance.
Why BIMCO thinks Trump’s plan is all wet
BIMCO’s argument hinges on three key points:
- Higher costs for U.S. consumers: Port fees, as BIMCO points out, don’t just vanish into thin air. They’re passed down the supply chain, landing squarely on the shoulders of U.S. importers and, ultimately, American consumers. With ships built in China making up a significant portion of the global fleet, these fees would ripple through the economy, inflating prices on everything from electronics to raw materials.
BIMCO highlights a staggering example: a $1,000-per-net-ton fee on a 300,000 DWT supertanker would cost over $100 million per port call. That’s not just a fee; that’s a financial tidal wave.
- A blow to U.S. energy exports: The proposal also mandates that 20% of U.S. exports be carried on American-built, American-flagged ships. Sounds patriotic, right? There’s just one problem: the U.S. doesn’t have enough ships to make it happen.
Take liquefied natural gas (LNG), a cornerstone of U.S. energy exports. As BIMCO notes, there are exactly zero U.S.-built, U.S.-flagged LNG carriers in operation or on order. The result? A potential freeze on U.S. energy exports, leaving the country’s energy sector high and dry.
- Unlikely to curb China’s dominance: Even if the tariffs are implemented, they’re unlikely to make a dent in China’s shipbuilding supremacy. Ships built in China aren’t going anywhere—they’re already a cornerstone of the global fleet. Instead of reducing China’s influence, the tariffs might just reshuffle the deck, with some operators avoiding U.S. ports altogether and others doubling down on non-U.S. trade routes.
Broader consequences for global trade
BIMCO’s letter doesn’t just highlight the immediate economic fallout; it also warns of broader consequences. For starters, the tariffs could lead to port congestion as operators reduce their calls to U.S. ports. Fewer port visits mean fewer jobs for dockworkers and potentially crippling delays for U.S. importers and exporters.
Then there’s the issue of market segmentation. Operators might start tailoring their fleets to avoid ships built in China for U.S. trade, while others could go all-in on Chinese-built vessels for non-U.S. routes. The result? A fragmented global shipping market, with higher costs and less efficiency for everyone.
A dose of perspective
While the Trump administration argues that the tariffs are necessary to counter China’s aggressive expansion in shipbuilding, BIMCO and other industry experts warn that the collateral damage could outweigh any potential benefits. Instead of boosting U.S. industry, the policy might drive up costs, disrupt energy exports, and complicate global trade flows.
Adding to the uncertainty, BIMCO has received numerous inquiries from its members regarding how these proposed tariffs might impact existing and future shipping contracts. In particular, there is concern over which party would bear the additional costs under current charter party agreements. Since many contracts allocate port fees differently depending on the type of agreement, the lack of clarity over how the tariffs would be applied poses a significant risk.
Moreover, BIMCO warns that ship operators will need to reassess new contracts to ensure that potential tariff implications are accounted for in freight rates, taxation clauses, and force majeure provisions. Until the final details of the tariffs are known, uncertainty will continue to cast a long shadow over the industry.
What’s next?
With a public hearing scheduled for March 24, 2025, the shipping industry is holding its breath. Will the U.S. Trade Representative heed BIMCO’s warnings and chart a new course? Or will the Trump administration plow ahead, full steam into choppy waters? One thing’s for sure: if the tariffs are implemented as proposed, the U.S. economy could be in for a bumpy ride. And as BIMCO’s letter makes clear, the shipping industry isn’t about to go down without a fight.