U.S.-China trade war deepens as the two nations hit each other with high tariffs. Image credit: ING Think
(The Post News) – The U.S.-China trade war takes a new turn this week as the two nations are about to raise port fees on each other’s merchant ships starting Tuesday. The move risks driving up consumer prices in the United States and adding to already tight global shipping lanes creaking under months of escalating trade tensions.
The new face-off follows China’s retaliatory action to match the Trump administration’s new port fees on Chinese-flagged vessels. The U.S. maintains that the fees will help finance domestic ship building and reduce reliance on Chinese carriers, but analysts expect the fees to eventually filter over to American consumers.
U.S. Port Fees Aim to Revive Shipbuilding
The U.S. Trade Representative Office informed that Chinese-owned or managed ships arriving in American ports will have to pay a fee of $50 per ton next week. The charge will rise by $30 annually until 2028. The same charges will have to be paid by non-Chinese operators with Chinese-built ships.
China’s Transport Ministry moved rapidly Friday, imposing equivalent port fees on American ships. Though not many U.S.-flagged ships visit China, less than 1% annually, the move represents a symbolic escalation of a conflict that has widened from tariffs to technology into the broader maritime sector.
“This is symbolic, but it shows that Beijing will mirror every single U.S. move,” said Cameron Johnson, a partner at Shanghai-based Tidalwave Solutions. “We’ve now escalated to a new level of trade warfare that nobody expected.”
The fee dispute coincides with a growing standoff over China’s control of critical minerals, which prompted President Donald Trump to threaten 100% tariffs on Chinese goods and restrictions on “all critical software.”
China branded the threats “a typical example of U.S. double standards.” The Commerce Ministry said it would take “countermeasures” in the event Trump proceeds. “China’s position has always been very clear: we don’t want a trade war, but we are not afraid of it,” a spokesman said.
Markets reacted violently on Friday, the S&P 500 dropped 2.7%, and Asian markets also dropped, Hong Kong’s Hang Seng falling 1.5%.
Shipping and retail trade groups warned that the new port fees would make American consumers pay more.
“More port charges will strain an already stretched shipping industry,” World Shipping Council President Joe Kramek stated.
Large carriers like COSCO, Maersk, and CMA CGM may be able to pass on some of the expense initially, but analysts say that is not feasible. Shipping advisory firm Drewry Supply Chain Advisors puts the new fees at a cost to global carriers of $3.2 billion by 2026.
“The fees will decrease shipping capacity to the U.S., making freight more expensive and subsequently, higher prices on store shelves,” warned John McCown, fellow at the Center for Maritime Strategy.
The new policy was a response to a complaint by five US unions complaining that China was engaging in unfair practices in shipbuilding. The United Steelworkers and International Association of Machinists and Aerospace Workers lauded the move, calling it “critical to rebuilding America’s maritime power.”
“America’s maritime and shipbuilding industries are vital to our national security,” the unions stated. “For too long, China has had these industries to itself.”.
But the tariffs won’t rebuild American shipyards, critics like Jonathan Gold of the National Retail Federation argue. “Punishing Chinese ships doesn’t solve our competitiveness problem,” he added.
Global Markets React
Financial markets are bracing for disruption as the trade impasse threatens to scuttle efforts towards a long-sought U.S.-China trade deal, due on November 10.
The U.S. dollar index gained 0.2% on Monday as optimism that the impasse could de-escalate was boosted, while the offshore yuan stabilized after a temporary drop. But uncertainty remains high, analysts add.
“Neither can maintain such high tariffs for long,” MUFG Bank strategist Lee Hardman said. “But in the meantime, global trade and currencies will be volatile.”
The deepening US-China trade war now threatens not just technology and goods but the very global shipping system that handles 80% of world trade. Economists caution that the port fees will suffocate supply chains, ignite inflation, and fan global economic turmoil just weeks ahead of crucial trade negotiations.
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