Critical developments in USTR actions on Chinese and foreign vessels

As industry stakeholders and government officials prepare for the implementation of the Office of the United States Trade Representative’s (USTR) Section 301 actions targeting Chinese and other foreign vessels, set to take effect on October 14, 2025ⁱ in accordance with USTR’s Notice of Action and Proposed Action in Section 301 Investigation of China’s Targeting the Maritime, Logistics and Shipbuilding Sectors for Dominance, Request for Comments (the April Notice), there have been recent developments by the US and Chinese governments that add both clarity and concern regarding such implementation, including:

1. On October 3, 2025, United States Customs and Border Protection (CBP) published CSMS # 66427144 - Section 301 Vessel Fees (the Bulletin), addressing key logistical matters related to payment of service fees;
2. On October 10, 2025, the USTR announced Notice of Modification and Proposed Modification of Section 301 Action: China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance (the October Modification), modifying the April Notice and adopting proposed changes set out in the June Proposal, providing clarification to language in the Annexes, and proposing further modifications to the Annexes that remain subject to public comment; and
3. On October 10, 2025, the Ministry of Transport of the People’s Republic of China (the PRC) published an Announcement by the Ministry of Transport on the Collection of Special Port Service Fees for US Vessels (the PRC Announcement), announcing that the PRC will impose port fees on US owned, operated, built or flagged vessels, in a form substantially mirroring the April Notice.

Detailed discussion regarding the April Notice, including the fees announced thereunder (the Service Fees), how the Service Fees and other restrictions will be applied to vessels subject to the Annexes and any relevant exemptions thereto, can be found here.ⁱⁱ

USTR’s Notice of Modification and Proposed Modification

The October Modification proposes modifications to the Annexes which remain subject to public comment, adopts modifications previously proposed in the June Proposalⁱⁱⁱ and provides clarifications to the existing language in the Annexes.

Comments on the proposed modifications in the October Modification may be submitted in writing until November 10, 2025.^iv

Annex I – applicable to Chinese-owned and Chinese-operated vessels

1. Proposed Annex I modifications. The October Modification proposes to exclude certain vessels subject to long-term time charter agreements with non-Chinese charterers from the obligation to pay the Annex I Service Fee. Specifically, the October Modification proposes modifying Annex I such that a vessel will be considered owned and operated by the charterer listed in the applicable time charter contract if such a vessel is either an LPG carrier (ICST Code 131) or other Liquified Gas Carrier (ICST 130), in each case which is ordered before April 17, 2025 and is in service and entered into a time charter agreement of 20 years or more prior to December 31, 2027.
2. Adopted Annex I modifications. The October Modification provides that vessels principally identified under the following ICST codes that may be subject to the proposed fee modifications in the October Modification may defer payment of the Annex I Service Fee from October 14, 2025, through December 10, 2025:

• 130 (Other Liquified Gas Carrier);

• 131 (LPG Carrier); and

• 139 (Other Liquefied Gas Carrier).

Annex II – applicable to Chinese-built vessels

1. Proposed Annex II modifications. The October Modification proposes to remove the Annex II Service Fee exemption for “vessels principally identified as ‘Lakers Vessels’ on CBP Form 1300” and replacing it with the following:

“vessels calling at a U.S. Great Lakes port: targeted coverage provisions (ii), (iii), and (iv) do not apply unless the vessel is loading cargo destined for a port outside of the United States, Canada, or Mexico, or offloading cargo that was loaded at a port outside of the United States, Canada, or Mexico.”

The above referenced “targeted coverage provisions (ii), (iii), and (iv)” respectively refer to vessels: (ii) arriving empty or in ballast; (iii) with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons or an individual bulk capacity of 80,000 deadweight tons; and (iv) vessels entering a US port in the continental US from a voyage of less than 2,000 nautical miles from a foreign port or point.

2. Provided Annex II clarifications. The October Modification provides the following clarifications:

• The exception to the Annex II Service Fee for “vessels arriving empty or in ballast” applies when the vessel does not have any cargo or passengers on board;

• Certain exceptions to the Annex II Service Fee for vessels with the following capacities will apply as follows:

• The exception to the Annex II Service Fee for vessels entering a US port in the continental United States from a voyage of less than 2,000 nautical miles from a foreign port or point is assessed based on the distance actually traveled from furthest foreign port call;^vi and
• The exception to the Annex II Service Fee for “specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms” may apply to vessels principally identified as ICST Code 120 (Chemical Tanker).

Annex III – applicable to foreign-built vehicle carriers

1. Proposed Annex III modifications. The October Modification proposes to include an exemption to the Annex III Service Fees for US-flag vessels of up to 10,000 deadweight tons; effective on October 14, 2025, and expiring, unless renewed, on April 18, 2029.
2. Adopted Annex III modifications. The October Modification adopted the previously proposed change to the basis of the Annex III Service Fee from a Car Equivalent Unit standard to net tons; however, the October Modification materially increased the rate to US$46.00 per net ton (from the proposed US$14.00 per net ton) as of October 14, 2025. The October Modification also limited the total collection of the Annex III Service Fee to five times per calendar year, per vessel.

The October Modification also clarified that “vehicle carrier,” as identified on CBP Form 1300 generally means the “vessel is designed for wheeled or tracked cargo that can load itself on board rather than being lifted through hatches,” and may include ICST codes: 325 (Vehicle Carrier); 332 (Ro-Ro Passenger); 333 (Other Ro-Ro Cargo); or 338 (Ro-Ro Container).

Additionally, the October Modification added a retroactive exemption to the Annex III Service Fee for US-owned or US-flagged vessels enrolled in the Maritime Security Program^vii and US Government vessels.

Finally, as with Annex I, the October Modification provides that vessels principally identified under the following ICST codes that may be subject to the fee modifications set forth in the October Modification may defer payment of the Annex III Service Fees from October 14, 2025, through December 10, 2025:

• 325 (Vehicle Carrier);

• 332 (Ro-Ro Passenger);
• 333 (Other Ro-Ro Cargo); and
• 338 (Ro-Ro Container).

Annex IV – applicable to LNG carriers for exporting US LNG

1. Proposed no further Annex IV modifications.
2. Adopted Annex IV modifications. The October Modification removes, retroactive to April 17, 2025, language empowering the USTR to direct the suspension of LNG export licenses if the requirements of Annex IV are not met, in line with the revisions proposed in the June Proposals.

Annex V – applicable to Chinese-built cargo handling equipment

1. Proposed Annex V modifications. The October Modification proposes to introduce an “Annex V.B” and further duties of up to 150 percent on additional cargo handling equipment to be included therein, including rubber tire gantry cranes, rail mounted gantry cranes, automatic staking cranes, reach stackers, straddle carriers, terminal tractors, top handlers/top loaders and other parts of these machines.
2. Adopted Annex V modifications. The October Modification introduces “Annex V.A” and adopts additional duties of 100 percent on applicable Chinese cargo handling equipment, including STS cranes, intermodal chassis and chassis parts, effective November 9, 2025. Notwithstanding this, the October Modification provides that STS cranes that fulfill contracts executed prior to April 17, 2025, and that enter the United States prior to April 18, 2027, will be exempt from the additional duties. Additionally, the October Modification does not impose additional duties on intermodal shipping containers, as had been previously considered in the June Proposal.

US Customs bulletin addresses Service Fee implementation

In the Bulletin, CBP addresses key logistics concerning the implementation of the April Notice, in particular, the payment of the Service Fees. As published, the April Notice did not include a specific payment mechanism for the Service Fees, noting that payment of the Service Fees “may be made using existing U.S. government methods to the extent possible as determined by CBP.”

The Bulletin:

• Identifies the Pay.gov website as the mechanism for the payment of the Service Fees;
• Provides that (i) CBP will utilize the Vessel Entrance and Clearance System (VECS), CBP’s existing electronic vessel entry and clearance management system, to help administer the Service Fees and (ii) the party filing vessel clearance will be responsible for confirming and updating information in the VECS system whenever necessary;
• Expressly states that the vessel operator, and not CBP, has the burden of determining whether a vessel is subject to a Service Fee; and
• Strongly encourages responsible parties to pay any applicable Service Fee at least three business days in advance of vessel arrival, noting that failure to provide proof of payment can result in cargo operation delays or the withholding of clearance.

Response of the People’s Republic of China

The PRC Announcement was issued October 10, 2025, in direct response to the USTR’s April Notice and introduced special port fees (the PRC Port Fees), effective October 14, 2025. The PRC Announcement itself directly cites the April Notice as the motivation for the PRC Port Fees. The PRC Port Fees will apply to any vessels:

1. Owned by US enterprises, other organizations and individuals;

2. Operated by US enterprises, other organizations and individuals;

3. Owned or operated by enterprises or other organizations in which US enterprises, other organizations and individuals directly or indirectly hold 25 percent or more of the equity (voting rights, board seats);

4. Flying the US flag; or

5. Built in the United States.

The PRC Announcement clarifies that the following vessels will be exempted from the PRC Port Fees: 

• vessels constructed in China under items 1 to 4, above;
• empty vessels entering Chinese shipyards solely for repair; and 
• other vessels granted exemptions upon verification.

The PRC Port Fees will be charged on a voyage-by-voyage basis at the following rates:

With regard to the above rates, the PRC Announcement notes that vessels with cargo less than 1 net ton will be rounded up to 1 net ton. The PRC Port Fees will be collected by the maritime authority at the port of call. The PRC Announcement also provides that the PRC Port Fees will not be charged for more than five voyages of the same vessel in a year. Finally, the PRC Announcement notes that specific implementation procedures will be formulated by the Ministry of Transport.