China Retaliates with Special Port Feeson US Vessels: Escalating Maritime Trade Tensions and Legal Implications

Introduction: A Direct Response to US Maritime
Charges

On October 14, 2025, China’s Ministry of Transport (MOT) announced the
implementation of special port fees targeting vessels with significant US ownership or
control, marking a decisive escalation in maritime trade tensions between the world’s
two largest economies. The measure, framed explicitly as retaliation for similar
charges imposed by the United States on Chinese vessels, establishes a phased fee
structure ranging from RMB 400 to RMB 1,120 per net ton, with implementation
beginning immediately and full enforcement by January 1, 2026. For international
shipping companies, maritime law practitioners, and businesses dependent on
transpacific trade, these developments create immediate compliance obligations and
longer-term strategic challenges that demand careful navigation.

The Chinese port fees represent a mirror-image response to the United States Trade
Representative’s (USTR) October 2025 update to its Section 301 investigation of
China’s maritime, logistics, and shipbuilding sectors. The USTR’s findings, which
alleged unfair trade practices and market distortions in these industries, resulted in
the imposition of special port fees on Chinese-operated vessels calling at US ports.
China’s retaliatory measures adopt strikingly similar parameters, including
comparable fee levels, phased implementation timelines, and ownership thresholds
for determining vessel coverage. This tit-for-tat dynamic reflects the broader pattern of
regulatory retaliation that has characterized US-China economic relations in recent
years and signals that maritime trade has become a new frontier in this ongoing
contest.

For law firms advising clients in the shipping industry and international trade sectors,
these developments create multifaceted challenges spanning immediate compliance
requirements, strategic operational planning, and longer-term risk management. The
port fees will directly impact vessel operating economics, potentially affecting route
planning, cargo pricing, and competitive positioning. They also raise complex legal
questions about the scope of retaliatory measures under international trade law, the
potential for further escalation, and the strategies available to affected businesses
seeking to minimize exposure or challenge the measures’ application.

The Fee Structure: Phased Implementation and
Ownership Thresholds

China’s special port fees employ a carefully calibrated structure designed to maximize
economic impact while providing a measured implementation timeline. The fee levels
are set at RMB 400 per net ton for the initial phase (October 14, 2025, through
December 31, 2025), increasing to RMB 750 per net ton for the second phase (January
1, 2026, through June 30, 2026), and reaching the full RMB 1,120 per net ton level
beginning July 1, 2026. This phased approach mirrors the implementation timeline
employed by the United States for its corresponding measures, suggesting deliberate
calibration to maintain proportionality in the retaliatory response.

The economic impact of these fees is substantial. For a typical large container vessel
with a net tonnage of 100,000 tons, the fees would amount to RMB 40 million
(approximately USD 5.5 million) in the initial phase, rising to RMB 112 million
(approximately USD 15.4 million) at full implementation. These costs represent
significant additions to vessel operating expenses and will inevitably affect the
economics of transpacific trade routes. Shipping companies must absorb these costs,
pass them through to cargo customers via surcharges, or adjust operations to
minimize exposure—each option carrying distinct business and competitive
implications.

The determination of which vessels are subject to the fees employs a 25% ownership
threshold that captures a broad range of US-connected vessels while avoiding
overreach that might affect vessels with minimal US involvement. Under the MOT’s
framework, vessels are subject to the special fees if US persons or entities own,
directly or indirectly, 25% or more of the vessel’s ownership interests. This threshold is
lower than the 50% control standard often employed in other regulatory contexts,
reflecting China’s intent to capture vessels with significant but not necessarily
controlling US interests.

The ownership determination methodology requires careful analysis of corporate
structures, particularly for vessels owned through complex holding arrangements
common in international shipping. The “directly or indirectly” language indicates that
Chinese authorities will look through intermediate holding companies to identify
ultimate beneficial ownership. This creates compliance challenges for shipping
companies with multilayered ownership structures, requiring detailed documentation
of ownership chains and careful assessment of whether US persons’ aggregate
interests meet the 25% threshold.

Significantly, the MOT’s announcement does not provide detailed guidance on several
critical implementation questions. The methodology for calculating “indirect”
ownership through multiple corporate layers remains unclear, creating potential
uncertainty about threshold application in complex structures. The treatment of
various ownership instruments—including preferred shares, convertible securities,
and options—has not been specified, leaving questions about whether these
instruments count toward the 25% threshold. The procedures for vessels to
demonstrate non-US ownership or to seek exemptions have not been detailed,
creating practical challenges for compliance and dispute resolution.

Legal Basis and International Trade Law Implications

China’s port fees raise significant questions under international trade law, particularly
regarding the permissible scope of retaliatory measures and their consistency with
World Trade Organization (WTO) obligations. While China frames the measures
explicitly as retaliation for US actions, the legal foundation and international law
implications merit careful examination.

From China’s perspective, the port fees may be characterized as a proportionate
response to what it views as discriminatory US measures targeting Chinese maritime
interests. The principle of reciprocity in international relations provides a general
foundation for responsive measures when one state perceives its interests harmed by
another’s actions. China may argue that its measures are calibrated to match the
economic impact of US fees, employ similar implementation timelines and thresholds,
and target the same industry sector, thereby maintaining proportionality in the
retaliatory response.

However, the measures’ consistency with WTO obligations presents more complex
questions. The General Agreement on Trade in Services (GATS), which governs trade in
services including maritime transport, establishes most-favored-nation (MFN)
treatment obligations requiring WTO members to accord services and service
suppliers of other members treatment no less favorable than that accorded to like
services and service suppliers of any other country. Port fees that discriminate based
on vessel ownership nationality could potentially violate these MFN obligations, unless
justified under GATS exceptions or other applicable provisions.

China might seek to justify the measures under GATS Article XIV, which permits
measures necessary to protect public morals or maintain public order, or under
security exceptions in Article XIV bis. However, these exceptions require demonstrating
that measures are necessary for the stated objective and are not applied in a manner
constituting arbitrary or unjustifiable discrimination. Whether port fees imposed in
retaliation for another country’s trade measures would satisfy these standards
remains uncertain and would likely be subject to dispute settlement proceedings if
challenged.

The measures also raise questions about their relationship to China’s broader trade
dispute mechanisms. China has previously initiated WTO dispute settlement
proceedings challenging various US trade measures, including tariffs imposed under
Section 301 investigations. The port fees could be viewed as unilateral retaliation
pending WTO dispute resolution, potentially complicating China’s position in those
proceedings. Alternatively, they might be characterized as countermeasures
authorized under international law principles governing state responsibility, though
the application of such principles in the trade context remains contested.

For affected businesses and their legal advisors, these international law questions
create both risks and potential opportunities. The legal uncertainty surrounding the
measures’ WTO consistency might provide grounds for challenging their application or
seeking their suspension pending dispute resolution. However, pursuing such
challenges requires careful consideration of the political and diplomatic context, the
likelihood of success, and the potential for further retaliatory measures in response to
legal challenges.

Impact on Shipping Operations and Trade Flows

The special port fees create immediate and substantial impacts on shipping
operations and transpacific trade flows, affecting vessel deployment decisions, cargo
pricing structures, and competitive dynamics in the maritime industry. These impacts
will reverberate through supply chains, ultimately affecting businesses and consumers
dependent on US-China trade.

For shipping companies operating vessels subject to the fees, the most immediate
challenge involves absorbing or passing through the additional costs. The magnitude
of the fees—potentially exceeding USD 15 million per vessel call at full implementation
—makes absorption economically unfeasible for most operators. Consequently,
shipping lines will likely implement port fee surcharges on cargo moving through
Chinese ports on affected vessels, passing costs through to shippers and, ultimately, to
importers and consumers.

The implementation of surcharges creates competitive distortions in the shipping
market. Vessels subject to the fees will be at a cost disadvantage compared to vessels
with less than 25% US ownership, potentially affecting market share and cargo
allocation decisions. Shippers may prefer to route cargo on vessels not subject to the
fees, creating demand shifts that could affect vessel utilization and freight rates. These competitive dynamics may incentivize shipping companies to adjust their vessel
ownership structures to minimize US ownership interests, potentially triggering
complex corporate restructuring transactions.

Route planning and vessel deployment decisions will also be affected by the fee
structure. Shipping companies may reduce calls at Chinese ports by affected vessels,
consolidating cargo to minimize the number of fee-triggering port visits. They may
adjust service rotations to deploy non-affected vessels on routes with heavy Chinese
port exposure while redeploying affected vessels to routes with less China exposure.
These operational adjustments could affect service frequency, transit times, and cargo
capacity on key trade lanes, with downstream effects on supply chain reliability and
efficiency.

The port fees may also accelerate trends toward transshipment and alternative routing
to minimize direct calls at Chinese ports by affected vessels. Cargo might be
transshipped at intermediate ports in Southeast Asia, South Korea, or Japan, with
feeder vessels completing the journey to Chinese destinations. While such
arrangements avoid the port fees, they add complexity, cost, and time to supply
chains, potentially offsetting the fee savings and creating new operational challenges.

For beneficial cargo owners—the manufacturers, retailers, and other businesses that
ship goods between the United States and China—the port fees create cost pressures
and supply chain uncertainties that demand strategic response. Companies must
evaluate whether to absorb surcharges, pass them to customers, or adjust sourcing
and logistics strategies to minimize exposure. They must assess the reliability of
shipping services as carriers adjust operations in response to the fees. They must also
consider whether the fees signal broader deterioration in US-China trade relations that
might warrant more fundamental supply chain restructuring.

Strategic Responses and Risk Mitigation for Affected Businesses

Businesses affected by China’s port fees must develop comprehensive strategies
addressing immediate compliance requirements, operational adjustments, and
longer-term risk management. These strategies span multiple dimensions, from
corporate structure optimization to supply chain reconfiguration.

Ownership Structure Analysis and Optimization
For shipping companies, the 25% ownership threshold creates incentives to evaluate
and potentially restructure vessel ownership arrangements. Companies should
conduct thorough analyses of their vessel ownership structures, identifying which
vessels currently exceed the 25% US ownership threshold and evaluating options for
restructuring to reduce US ownership interests below the threshold. This might involve
selling down US investors’ stakes, bringing in non-US investors to dilute US ownership
percentages, or restructuring holding company arrangements to minimize attributable
US ownership.

However, ownership restructuring carries significant complexities and potential costs.
Changes in vessel ownership may trigger tax consequences, affect financing
arrangements, implicate securities law requirements, or conflict with other regulatory
obligations. Restructuring transactions require careful legal and financial analysis to
ensure that threshold reduction objectives are achieved without creating unintended
adverse consequences. Companies must also consider whether Chinese authorities
might adopt anti-avoidance rules targeting restructuring transactions designed
primarily to circumvent the fee requirements.

Operational Adjustments and Route Optimization
Shipping companies should evaluate operational adjustments that can minimize fee
exposure while maintaining service quality and competitive positioning. This includes
analyzing route networks to identify opportunities for deploying non-affected vessels
on China-intensive routes while redeploying affected vessels to routes with less China
exposure. It involves evaluating whether service frequency adjustments, port rotation
changes, or cargo consolidation strategies can reduce the number of fee-triggering
port calls while meeting customer requirements.

Companies should also model the economics of various operational scenarios,
comparing the costs of paying fees against the costs and revenue implications of
operational adjustments. In some cases, paying fees and passing costs through to
customers may be more economical than complex operational restructuring. In
others, strategic redeployment may offer superior economics and competitive
positioning. Sophisticated analysis incorporating vessel economics, cargo demand
patterns, and competitive dynamics is essential for optimal decision-making.

Supply Chain Reconfiguration for Cargo Owners
Beneficial cargo owners should evaluate whether the port fees warrant supply chain
reconfiguration to reduce dependence on affected shipping services or Chinese port
exposure. This might include diversifying sourcing to reduce China dependence,
exploring alternative logistics routes that minimize Chinese port calls, or adjusting
inventory strategies to reduce shipping frequency and consolidate cargo on non-
affected vessels.

However, supply chain reconfiguration carries its own costs and risks. Alternative
sourcing may involve higher production costs, quality variations, or longer lead times.
Alternative logistics routes may add transit time and complexity. Inventory strategy
changes may increase working capital requirements or affect service levels.
Companies must carefully evaluate whether fee-related costs justify the investments
and risks associated with supply chain restructuring.

Legal and Advocacy Strategies
Affected businesses should also consider legal and advocacy strategies to challenge
the fees or seek their modification. This might include engaging with government
officials in both the United States and China to advocate for resolution of the
underlying trade dispute that triggered the retaliatory measures. It could involve
participating in industry association efforts to present unified positions on the fees’
impacts and to propose alternative approaches. In some circumstances, it might
include legal challenges to the fees’ application based on international trade law
principles or domestic administrative law requirements.

However, legal and advocacy strategies require careful calibration to avoid triggering
further retaliation or damaging important commercial relationships. Businesses must
weigh the potential benefits of challenging the measures against the risks of
heightened regulatory scrutiny, adverse publicity, or deterioration in relationships
with Chinese authorities or customers. Coordination with industry peers and careful
diplomatic engagement may offer more promising approaches than confrontational
legal challenges.

Conclusion: Navigating the New Reality of Maritime Trade Tensions

China’s implementation of special port fees targeting US-connected vessels marks a
significant escalation in maritime trade tensions and creates a new dimension of
complexity for international shipping and transpacific commerce. The measures
reflect the broader pattern of regulatory retaliation characterizing US-China economic
relations and signal that maritime trade has become a contested domain in this
ongoing competition. For shipping companies, cargo owners, and their legal advisors,
these developments demand immediate action to ensure compliance and longer-term
strategic planning to manage evolving risks.

The immediate priority involves understanding the fee structure, determining which
vessels are subject to the measures, and implementing compliance processes to
ensure proper fee payment and documentation. Shipping companies must assess
their exposure, evaluate operational and structural responses, and develop strategies
for managing the economic impact. Cargo owners must understand how the fees will
affect their logistics costs and supply chain reliability, and must consider whether
adjustments to sourcing or logistics strategies are warranted.

Beyond immediate compliance, the port fees underscore the importance of supply
chain resilience and diversification in an environment of escalating trade tensions.
Businesses overly dependent on single trade lanes, logistics providers, or sourcing
locations face heightened risks as regulatory measures proliferate and trade
relationships deteriorate. Building flexibility into supply chains, maintaining
alternative sourcing and logistics options, and developing capabilities to respond
rapidly to regulatory changes become essential strategic imperatives.

For international law firms, these developments create significant advisory
opportunities and challenges. Clients require sophisticated guidance on compliance
requirements, operational strategies, ownership restructuring, and risk management
in the face of evolving maritime trade regulations. They need advocacy support in
engaging with regulators and industry associations to shape policy responses. They
may require representation in disputes arising from the fees’ application or in
challenges to their legal validity. Firms that develop deep expertise in maritime trade
regulation, US-China trade relations, and international trade law will be well-
positioned to serve clients navigating these turbulent waters.

The broader message is clear: maritime trade has entered a new era of regulatory
complexity and geopolitical tension. The port fees represent one manifestation of this
shift, but they are unlikely to be the last. Businesses and their legal advisors must
prepare for continued evolution of maritime trade regulations, potential further
escalation of retaliatory measures, and the need for increasingly sophisticated
strategies to manage regulatory risk while maintaining operational effectiveness.
Success in this environment requires not only legal compliance but also strategic
foresight, operational flexibility, and diplomatic engagement to navigate the complex
intersection of law, commerce, and geopolitics in international maritime trade.

References

[1] Clyde & Co. (2025, October 15). Chinese Response to USTR Update on China
Charging Scheme: Special Port Fees for US Vessels. https://www.clydeco.com/en/insights/2025/10/chinese-response-to-ustr-update-on-china-charging

[2] United States Trade Representative. (2025, October). Section 301 Investigation:
China’s Maritime, Logistics, and Shipbuilding Sectors – Update. https://ustr.gov/

[3] China Ministry of Transport. (2025, October 14). Announcement on Special Port
Fees for Vessels with US Ownership. [Official MOT Website]