The USTR&rsquo s proposed actions alone faces the serious risk of isolating U.S. businesses while failing to resurrect supply chains that have been eroding over decades.

Shipbuilding is among the latest industries scheduled for protectionist measures in the U.S., with the Office of the U.S. Trade Representative (USTR) holding hearings from March 24 to 26 to discuss newly proposed actions targeting China. The proposed actions include the imposition of substantial port fees on Chinese vessel operators, non-Chinese operators of China-built vessels, and operators who have placed orders for China-built vessels.

The actions were proposed under Section 301 of the Trade Act of 1974, which gives the USTR, part of the Executive Office of the President, broad powers to investigate and act in matters of trade. After launching an investigation into China&rsquo s maritime, logistics and shipbuilding sectors in April 2024, the USTR proposed the actions on February 21 and sought public feedback by March 24.

Multiple industry groups spoke out against the proposed port fees in the lead-up to and during the hearings. Kathy Metcalfe, President and CEO of the Chamber of Shipping of America, said replacing Chinese-built vessels &ldquo is not like flipping a light switch&rdquo and highlighted the structural challenges facing U.S. shipbuilders.

Data from China&rsquo s Ministry of Industry and Information Technology show that in 2024, China accounted for 55.7 percent of vessel completions and an overwhelming 74.1 percent of new orders worldwide. In contrast, the U.S. held a negligible share of less than 1 percent of the global shipbuilding market, according to the findings of the USTR investigation.

China&rsquo s shipbuilding strength is driven by vertically integrated supply chains and labor costs much lower than those in the U.S. The U.S. commercial shipbuilding sector, however, remains trapped in a negative feedback loop, where container ships are built at four to five times the cost of their Asian counterparts, relying heavily on imported components. Industry insiders said the USTR&rsquo s proposed actions alone will not resurrect supply chains that have been eroding over decades.
This aerial photo shows workers working on a container vessel at a shipyard of Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. in Taixing, east China&rsquo s Jiangsu Province, Dec. 5, 2023. (Photo/Xinhua)

The proposed actions have also drawn strong opposition from other sectors within the U.S. According to Alejandra Castillo, President and CEO of the North American Export Grain Association, U.S. exports of grain, oilseeds, and their co- and by-products support over 450,000 American jobs and contribute $174 billion to the U.S. economy annually.

Castillo noted that these markets are highly competitive, characterized by low margins and strong price sensitivity, and said there is growing concern that the implementation of the proposed measures could cause irreversible damage to U.S. bulk agricultural exports and undermine the significant trade surplus they currently generate.

A March report by Trade Partnership Worldwide LLC, an international trade and economic research firm, also warned that if all of the measures proposed by the USTR were implemented, U.S. total exports of goods and services could fall by 7.2 percent, while imports of goods and services might decline by 5 percent.

This latest U.S. maritime protectionism recalls historical examples, like the 1920 Jones Act, which raised domestic shipping costs to three times the global average. The law required U.S. waterborne trade to use ships built, owned and operated by Americans. However, it led to a decline in domestic cargo ships, as U.S. vessels were typically four times more expensive to build than European or Asian ships due to labor and material costs.

A general view shows container terminal in Hong Kong, China, April 23, 2025. REUTERS/Tyrone Siu/File Photo  Purchase Licensing  Rights

The dispensation, which follows  de-escalatory  statements from Washington, signals that the world' s two largest economies were prepared to rein in their conflict, which had frozen much of the trade between them, raising fears of a global recession.

U.S. President Donald Trump told TIME magazine in an  interview  that U.S.-China talks were taking place on tariffs, and that Chinese President Xi Jinping had called him. Beijing has so far disputed the U.S. characterization of talks.

A Friday  statement  by the Politburo, the Communist Party' s elite decision-making body, focused on efforts to maintain stability at home by supporting firms and workers most affected by tariffs.

The chief executive of French aircraft engine maker Safran  (SAF.PA)  said on Friday it had been  informed the previous night  that China had granted tariff exemptions on " a certain number of aerospace equipment parts" including engines and landing gear.

While Washington has said the trade stand-off with China  is economically untenable  and already offered  tariff exemptions  to some electronic goods, China has repeatedly said it is willing to fight to the end unless the U.S. lifts its 145% tariffs.

Big pharmaceutical companies including AstraZeneca  (AZN.L)  and GSK  (GSK.L)  have at least one manufacturing site in the U.S. for drugs sold in China, according to Chinese government data.

Major ethane processors have already  sought tariff waivers  from Beijing because the U.S. is the only supplier.