On April 17th the U.S. Trade Representative's office is expected to impose fees of up to $1.5M per port call for ships made in China and for $500k to $1M if the ocean carrier owns a single ship made in China or even has one on order from a Chinese shipyard. 🧵 1/
Ocean carriers have announced that to reduce the fees they will skip the smaller ports like Seattle, Oakland, Boston, Mobile, Baltimore, New Orleans, etc.
Some carriers have said they'll just move the capacity serving the U.S. to other trade lanes altogether. /2
Some carriers have said they'll just move the capacity serving the U.S. to other trade lanes altogether. /2
This would be horrible for jobs in and around those ports, and really bad for companies, both importers and exporters, using those ports. Huge extra costs will be incurred as trucks and trains run hundreds of extra miles to the main ports on each cost. 3/
Similarly the major ports (LA, Long Beach, Houston, and New York) will be unable to keep up with the flood of extra volumes and are likely to become congested, similar to what we saw during Covid. 4/
The craziest part of the original proposal is a requirement that within 7 years 15% of U.S. exports must travel on a ship that's made in America and crewed by Americans. 5/
There are only 23 of American made and crewed container ships in the world today, and they all service domestic ocean freight (Alaska, Hawaii, Guam, Puerto Rico, etc). They're all tiny compared to today's mega ships, and they're not even sailing to overseas ports. 6/
The U.S. did not produce any container ships in 2024. And the number we produce in any given year rounds to zero. The reason is that American made container ships of 3,000 TEUs cost the same price as the modern container ships from China of 24,000 TEUs. 7/
One shipyard in China made more commercial ships last year than the total number the U.S. has produced since World War Two. 8/
During East Asia's successful industrialization, their government's required the manufacturing sectors to produce goods for export, it wasn't enough just to produce for their domestic markets. 9/
This was how they could prove that they were actually building globally competitive companies and products. If nobody wanted to import their goods, they knew that they weren't actually building successful companies. 10/
As the Trump Administration pursues the noble goal of re-industrializing the United States, passing a pass a rule simultaneously that limits U.S. exports as a function of American made ships—ships that today that will hamstring exporters would be a true self-own. 11/
Given what just happened with the new tariffs tanking global equities markets, it would be crazy for the USTR to go through with this rule. If we want the U.S. to be competitive in global manufacturing, we need world-class port infrastructure and logistics connectivity. /12
In the meantime, U.S. manufacturers who have just had massive new tariffs placed on components and machinery sourced from abroad should brace themselves for impact because all indications are that this rule is coming on April 17th. /end
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