US tariff tsunami looms over shipping industry as stakeholders brace for impact

Following the Office of the United States Trade Representative (USTR)’s late February announcement regarding new tariffs on Chinese-built vessels, shipowners and charterers have scrambled to assess the fallout as concerns over rising transport costs and potential trade route disruptions mount.

When President Donald Trump’s administration announced that a fee of up to $1.5 million could be charged to Chinese-built vessels calling at US ports—an initiative described as an effort to ‘once and for all’ curb China’s dominance in shipping and restore the United States’ position in the global maritime industry arena—the world of shipping mustered through the initial wave with growing anxiety.

Namely, China’s position in shipping and shipbuilding has been on a steady growth trajectory, pouring oil into the fire of the age-old rivalry between the two transpacific ‘rivals’. In fact, Veson Nautical’s “End of Year Market Report 2024/2025” showed that China has ranked number one in shipbuilding in the world for the past five years, followed by South Korea—which allegedly took over as number one during January 2025—and Japan.

To put it further into perspective, per Greek shipbroker Intermodal new analysis, around 41.5% of the total in-service fleet was built at one of the China-based yards, including 32.2% of the container fleet, 22.2% of the global tanker fleet and 11.6% of the gas fleet.

Moreover, the Chinese shipyard orderbook presently comprises around 3,759 units, with bulkers making up 6.5% of the amount, tankers making up 9.3%, and boxships roughly 8% and gas carriers 8.3%.

The Far Eastern country’s shipping investors have also been busy, with recent data published by maritime freight management solutions provider Veson Nautical revealing that, in 2024 only, Chinese stakeholders ploughed a staggering $123 billion into newbuilding orders.

Conversely, US shipowners have had limited options domestically and often turn to foreign shipbuilders for new units, particularly in the container segment where the majority of existing vessels servicing ‘vital’ trade routes were built in the Far Eastern nation.

The reason behind this is US shipbuilding’s decline, with the country’s yards being unable to produce more than five units per year, whereas China reportedly manufactures more than 1,700 new ships annually, Ambassador Katherine Tai, the principal trade advisor, negotiator, and spokesperson on U.S. trade policy, revealed.

The lack of mass production in the United States of America, compared to the ‘surplus’ of manufacturing across the Pacific Ocean, created another aspect of disbalance: currently, China has around 5,000 ships (and growing) under its flag, whereas the US only has 80—something that the new presidential administration is seeking to change.

One proposal to shift the scales in ‘America’s favor’ was the introduction of the “New SHIPS for America” act, unveiled in December 2024. As described, the act aims to fortify the United States maritime industry, ramp up production of both commercial and military efforts, and, simultaneously, clamp down on China’s influence and position within this landscape.

Another ‘step forward’ was declared in President Trump’s address to Congress on March 4, 2025, when Trump said he would “bring shipbuilding back to America” via efforts such as the establishment of a new Office of Shipbuilding at the White House.

US tariffs on Chinese-built vessels have already sent ripples through the shipping industry, with uncertainty weighing on owners and charterers. The small pool of alternative shipbuilder choices, beyond China, is also limited, since Japan and South Korea may not be able to immediately meet an abruptly-inflated demand, cranking up the pressure further.

Complicating matters even more, many non-Chinese shipping companies rely on Chinese-built vessels, meaning these tariffs wouldn’t just hit China—they could disrupt global trade networks and provoke diplomatic and economic backlash.

In addition to this, since shipping operates on long-term contracts and strategic planning, a sudden tariff rollout could trigger legal and financial chaos for companies around the world, causing stakeholders to adopt a wait-and-see stance, or reconsider trade routes altogether.

As Bloomberg reported, Soren Toft, Chief Executive Officer of Switzerland-based titan Mediterranean Shipping Company (MSC), suggested at a conference in Long Beach, California, that: “If it comes out in the present form, it’s going to have significant consequences. Either we will have to revise our network and withdraw coverage, or we will have to add that cost on top. Ultimately, the consumer will have to pay.“

Toft allegedly also hinted at a World Shipping Council (WSC) assessment of the USTR proposal and estimated the total industry impact could turn out to be more than $20 billion, i.e. an extra $600 to $800 per container.

Other shipping segments, as noted by Intermodal, show similar fluctuations. The tanker sector is already feeling the pressure with freight rates weakening across important routes.

The very large crude carrier (VLCC) segment has ‘softened’, with reduced activity and an oversupply of tonnage dragging down rates. The Greece-headquartered shipbroker’s data also reads that Middle East-to-China (TD3C) has fallen by 8.5%, while the West Africa-to-China (TD15) route dipped 4% week-on-week, further putting into perspective the effects that the tariffs proposed by the Trump Administration could have.

While the fees could be a bargaining chip in US-China negotiations, their enforcement remains a logistical and economic minefield, some sources say, carrying serious risks for both the United States economy and global trade stability.

But the tariffs, coupled with recent sanctions imposed by the US Department of Defense (DOD) on more than 130 Chinese companies, including state-owned colossal COSCO Shipping, have also brought to the surface a growing concern: protectionism.

Defined as the use of government policies to restrict international trade in favor of domestic industries, protectionism is considered a ‘certain path’ to escalating tensions and causing major disturbances between nations.

In its “ICS Barometer Report 2023-2024”, the International Chamber of Shipping (ICS) warned of an ‘alarming’ surge in protectionist policies fueled by a combination of factors: the aftermath of COVID-19, energy and trade security concerns, geopolitical tensions, and decarbonization efforts.

Emanuele Grimaldi, International Chamber of Shipping Chairman, stressed that, currently, trade is “being weaponized” so that nations could acquire “greater advantage or achieve political aims”—ambitions which Grimaldi believes have ‘no place in an industry as crucial as shipping’.

It is understood that the broader ramifications of such policies could extend beyond the maritime sector. As proposed, protectionist policies, the imposition of the tariffs, paired with existing or prospective sanctions, could provoke wider retaliatory actions, leading to more barriers that could disturb cargo flows.

At the same time, some industry analysts believe that economic friction could speed up supply chain diversification initiatives as some stakeholders attempt to relocate manufacturing and source away from China, though whether or not this would be the case remains to be seen.

Should that be so, especially if any major logistics alliance revised their networks, smaller ports could face decreased traffic, affecting local economies and logistics firms dependent on steady cargo throughput and, beyond that, while the shipping arena could completely alter in the years to come.

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