New USTR Proposals for Chinese Vessels: Terms, Unresolved Questions, Contractual Considerations

On Feb. 21, 2025, USTR announced its proposal (1) to require that exporters of U.S. goods use U.S.-flagged and U.S.-built vessels for an increasing percentage of their exports; and (2) to impose service fees on Chinese vessel operators and other operators that use or contract (charterparties) for the use of Chinese-built vessels.

The problem is acute because China owns and produces a substantial majority of ships, shipping containers, and intermodal chassis. Parties need to assess immediate and long-term responses. As a first step the parties will want to have counsel review their existing contracts to determine which party bears the cost of the proposed port fees. Neither force majeure clauses nor provisions incorporating the doctrine of frustration are expected to offer any relief to shippers and carriers although other potential provisions such as change in law clauses could apply. Some contracts may include language about tariffs or sanctions.

Whether or not this current USTR proposal goes into effect on Apr. 17, 2025, the shipping industry must understand who will bear the costs under their current contracts and then determine how to allocate the risks going forward.

Listen as this experienced panel of transportation and trade lawyers discusses the USTR's proposed actions and how parties can protect themselves now and in the future.

1. Statutory and procedural overview of proposed USTR action
2. Provisions of the proposed action
3. How parties are impacted
   • Time charters
   • Voyage charters
   • Joint ventures
4. Strategies for revising charterparty wording

The panel will review these and other key issues:

• What are the important questions not answered in the USTR proposal?
• Which party will have to cover the new fees under standard forms of time and voyage charters?
• What arguments might exist to shift the obligation to pay the proposed fees?