Trump is drafting an executive order that would rely on funding from a U.S. Trade Representative proposal to levy fines of up to $1.5 million on China-made ships or vessels from fleets that include ships made in China.

Those 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 U.S. exporters and transportation providers in interviews with Reuters, letters to U.S. officials, and comments ahead of USTR hearings next week.

High-profile containership operators and their retail and manufacturing customers have been vocal about the potential harm from the fees. Experts warn that the bulk and tanker ships that move basic goods like food and fuel could be more exposed because they cannot spread the cost among dozens of customers like container carriers can.

Ability to ship agricultural goods

U.S. farmers, who are already getting pummeled by retaliatory tariffs from China, Mexico and Canada, 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 U.S. agricultural products like corn, soybeans and wheat because exporters are unsure what the final cost would be, three U.S. grain export traders told Reuters.

The United States exported more than $64 billion (C$91.7 billion) in bulk crops, bulk animal feed and vegetable oils in 2024, according to U.S. Census Bureau Trade data. The North American Export Grain Association, which represents crop commodities exporters, will participate in next week’s hearing.

Bulk agricultural exporters could face an additional $372 million to $930 million (C$533 million to C$1.33 billion) in annual transportation costs from the fees, the Farm Bureau said. That would represent substantial margin loss in global markets where competitiveness is often determined by mere pennies per bushel.

U.S. agricultural exporters get an edge over global rivals by leveraging a cost-effective and efficient domestic transportation system for moving products to market, said Alexa Combelic, the American Soybean Association’s executive director of government affairs.

“When you add costs to that efficient system, it’s no longer efficient. We no longer have the competitive edge,” Combelic said.

Coal industry threatened

Vessel owners have already refused to provide offers for future U.S. coal shipments due to the proposed USTR fees, Xcoal Energy & Resources CEO Ernie Thrasher said in a letter to U.S. Department of Commerce Secretary Howard Lutnick dated March 12 and seen by Reuters.

Enacting and implementing the proposed port fees could cease exports of U.S. coal within 60 days, putting $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 U.S. coal, making it uncompetitive on the global market.

Coal mines in West Virginia are also preparing to lay off miners as unsold coal inventories pile up, Chris Hamilton, CEO of the West Virginia Coal Association, told Reuters.

The proposed fees could also make it harder for the U.S. to export other energy products like oil, liquefied natural gas, and refined fuels, the American Petroleum Institute, the powerful oil industry lobbying group, said in comments submitted to the USTR dated Mar. 10.

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That is the backdrop for this week’s S&P Global TPM container shipping and supply chain conference in Long Beach, California, an annual event that marks the start of container shipping contract negotiating season.

Attendees this year include industry heavyweights like container carriers MSC, Maersk and Hapag-Lloyd, marquee customers including Walmart, and major logistics firms including DSV and DHL.

Why it matters: Canadian agricultural goods are shipped all around the world, and Canada is at a freight disadvantage in many markets compared to some competitors

These companies will be grappling with the ripple effects of increased protectionism, which could reduce international trade while weakening the negotiating position of massive container ship owners that have drawn robust profits and for years held the upper hand in pricing.

Trump has already slapped an additional 10 per cent tariff on goods from China, the world’s largest exporter, and has proposed million-dollar port entry fees for Chinese-built ships.

As early as Tuesday, the U.S. could impose 25 per cent tariffs on familiar goods like avocados and tequila from Mexico, and beef, lumber and oil from Canada.

Trump has threatened to levy an additional 10 per cent tariff on Chinese goods. His administration also plans new or higher tariffs on steel and aluminum and has floated 25 per cent duties on products from the European Union.

“Unprecedented uncertainty is all around,” said Peter Sand, chief analyst at transportation pricing platform Xeneta.

The world’s biggest importer’s shift away from free trade hits as global supply chains are managing higher costs from global warming-fueled severe weather and routing ships away from the Suez Canal to avoid attacks by Iran-backed Houthi militants in support of Palestinians in Gaza.

U.S. container imports of everything from plastic toys to machine parts have surged, in part due to early purchases to avoid tariffs. But trade experts warn that a pullback is likely once new import taxes kick in, targeted nations retaliate, and inflation-weary shoppers absorb the brunt of tariff-related cost increases – something that could pressure shipping demand and prices.

The Drewry World Container Index’s spot rate for a 40-foot container was (US) $2,629 as of Thursday, 75 per cent below the pandemic peak of $10,377 in September 2021 and lowest since May 2024.

“The geopolitical landscape has of course become more complex which could lead to wild swings for freight rates in either direction, but our base case is for a moderation throughout 2025,” Jefferies analysts said in a recent note.

In another move that has set off alarms around the globe, the U.S. Trade Representative on Feb. 21 proposed hefty fees on Chinese-built vessels entering U.S. ports under a union-supported plan to spur U.S. shipbuilding.

Under the proposal, a vessel owned by Chinese maritime transport operators including state-owned COSCO would pay a port entrance fee of up to $1 million per vessel. The fee for other operators using Chinese-built ships could top out at $1.5 million.

The change could benefit Taiwanese and South Korean liner operators. Still, experts warn it will have a major impact on container carriers and could translate into steeper consumer prices for goods from toys and clothing to food and fuel.

“The economic burden on U.S. exporters and importers will be huge,” container shipping expert Lars Jensen said on LinkedIn.

“The actions taken by the U.S. administration over the past four weeks are unprecedented in scope and scale.”

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The success of the International Longshoremen’s Association in winning Trump’s support for its anti-automation battle could be instructive for unions facing contract renewals during his term, including the United Auto Workers, UPS Teamsters and the U.S. West Coast’s International Longshore & Warehouse Union.

The deal, announced on Wednesday night, must be ratified by some 45,000 members of ILA and the United States Maritime Alliance (USMX) employer group.

“This is a six-year détente in the tech-versus-labor tug-of-war at U.S. ports,” said Judah Levine, head of research at Freightos CRGO.O, a freight-booking and payments platform.

It landed days before an extended Jan. 15 deadline, averting a second strike that could have put a huge dent in the economy at the start of Trump’s second term on Jan. 20.

Father-and-son ILA leaders Harold and Dennis Daggett late on Wednesday called Trump a hero to the union and gave him “full credit” for the resolution of talks.

They pointed to a Truth Social post in mid-December, where Trump appeared to side with the union’s struggle against “foreign” employers after meeting with those ILA leaders.

“I’ve studied automation and know just about everything there is to know about it. The amount of money saved is nowhere near the distress, hurt and harm it causes for American Workers, in this case, our Longshoremen,” Trump wrote.

The employer group, which includes Maersk’s APM Terminals and the U.S. arms of major container carriers such as China’s COSCO Shipping, said the agreement came “thanks in large part to President Trump’s leadership.”

The ILA and USMX extended their bargaining deadline after a deadlock over automation sparked a three-day strike in October at major ports including New York and New Jersey, Houston and Savannah, Georgia.

President Joe Biden played a vital role in helping workers win a 62 per cent raise over six years, which ended the October strike.

Biden praised both the union and employers for reaching a tentative deal on Wednesday. Trump has not commented on Truth Social and his transition team did not immediately comment.

One pro-labor attorney cautioned against interpreting Trump’s post on automation as union support, saying that it was in keeping with his pugilistic approach to international policies.

“It supports his narrative of going after foreigners,” said Cathy Creighton, an attorney and director of Cornell University’s School of Industrial and Labor Relations in Buffalo.

— Reporting by Lisa Baertlein in Los Angeles and Daniel Wiessner in Albany, New York

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