Proposed US port fees on China-built ships begin choking coal, agriculture exports

US Trade War with China Stirs Uncertainty in Agriculture Market

[LOS ANGELES/CARLSBAD, CALIFORNIA] US President Donald Trump’s plan to revive US shipbuilding using massive fees on China-linked ship visits to American ports is causing US coal inventories to swell and stoking uncertainty in the embattled agriculture market, as exporters struggle to find ships to send goods abroad.

Proposed Fees Could Curb US Coal Exports

Trump is drafting an executive order that would rely on funding from a US Trade Representative (USTR) proposal to levy fines of up to US$1.5 million on China-made ships or vessels from fleets that include ships made in China. These potential port fees have limited the availability of ships needed to move agriculture, energy, mining, construction, and manufactured goods to international buyers, according to major US exporters and transportation providers.

Coal Industry Faces collapse

Vessel owners have already refused to provide offers for future US coal shipments due to the proposed USTR fees, Xcoal Energy & Resources CEO Ernie Thrasher said in a letter to US Department of Commerce Secretary Howard Lutnick dated Mar 12 and seen by Reuters. Enacting and implementing those fees could cease exports of US coal within 60 days, putting US$130 billion worth of shipments at risk, Thrasher said. He said the fee structure could add up to 35 per cent to the delivered cost of US coal, making it uncompetitive on the global market.

Job Losses Loom

"The loss of direct and indirect jobs would be catastrophic," said Thrasher, who confirmed sending the letter and said he has not received a response.

Agriculture and Energy Sectors Affected

The proposed fees could also make it harder for the US to export other energy products such as oil, liquefied natural gas (LNG), and refined fuels, the American Petroleum Institute, the powerful oil industry lobbying group, said in comments submitted to the USTR dated Mar 10. The USTR proposal also seeks to shift domestic exports to ships that are both flagged and built in the United States. The current fleet of US-flagged cargo vessels numbers less than 200, and not all are US built.

US Energy Exports at Risk

The proposed fees could curtail US energy exports – "specifically liquid natural gas as no US built, US flagged LNG carriers are in operation nor on order", said Bimco, which added that chemical exports could be severely affected as well.

US Farmers Caught in the Crossfire

US farmers, who are already getting pummelled by retaliatory tariffs from China, Mexico, and Canada, also are caught in the crossfire of the Chinese ship fee fight, the American Farm Bureau Federation said. The inability to secure ocean freight transportation from May and beyond has restricted their ability to sell bulk US agricultural products such as corn, soybeans, and wheat because exporters are unsure what the final cost would be.

Conclusion

The proposed fees have far-reaching implications for the US economy, threatening to disrupt global supply chains, cause job losses, and compromise the competitiveness of US industries. As the world waits with bated breath for the outcome of this trade war, one thing is clear: the stakes are high, and the consequences of inaction could be devastating.

FAQs

Q: What are the proposed fees for China-linked ship visits to American ports?
A: Up to US$1.5 million

Q: How will the proposed fees affect US coal exports?
A: Cease exports of US coal within 60 days, putting US$130 billion worth of shipments at risk

Q: What impact will the proposed fees have on US energy exports?
A: Could curtail US energy exports, specifically liquid natural gas and chemical exports

Q: What do US farmers stand to lose from the proposed fees?
A: Unable to secure ocean freight transportation, making it difficult to sell bulk US agricultural products globally

Q: What are the potential job losses projected from the proposed fees?
A: Catastrophic, according to Xcoal Energy & Resources CEO Ernie Thrasher