USTR Section 301 Fee and Tariff Measures and Their Impact to Charterparties

USTR Section 301 Fee and Tariff Measures and Their Impact to Charterparties

On October 14, 2025, significant new fees will be imposed by the Office of the U.S. Trade Representative (“USTR”) on owners and operators of certain Chinese-built, owned, or operated vessels calling at U.S. ports. The USTR has continued to modify these measures, which were issued as a result of its Section 301 Investigation into China’s Targeting the Maritime, Logistics and Shipbuilding Sectors for Dominance. Parties therefore should carefully monitor the USTR for any further clarifications or modifications. 

U.S. Customs and Border Protection (“CBP”) issued guidance on Friday, October 3, 2025[1], indicating that vessel operators will be responsible for assessing and paying the new fees under Annexes I through III of the Section 301 measures.[2]

On Friday, October 10, 2025, four days before many fees were due to come into effect, the USTR confirmed some of its previously-proposed modifications to Annexes III and IV, but also issued additional modifications to Annex III and significant additional proposals in relation to Annexes I, II, III and V along with a request for comments. The USTR also confirmed that new Section 301 duties on ship-to-shore cranes and other cargo handling equipment will go into effect under Annex V on November 9, 2025.

The USTR also has deferred payment of Annex I and Annex III charges from October 14 to December 10, 2025 for certain gas carriers as well as certain vehicle carriers and “Ro-Ro” vessels to the extent that those vessels may be subject to the fee modifications proposed in the October 10 Notice.

This article addresses the steps which led to the finalized fees, restrictions and further proposals, the significant questions that remain, and observations regarding the impact of the measures on owners and charterers of vessels under charterparties governed by English law.

Timeline- Port Fees and Restrictions

The USTR’s Section 301 investigation was initiated in April 2024 in response to a petition for relief filed in March 2024 by five national trade unions. The unions petitioned the USTR to take action to stem China’s allegedly unreasonable and discriminatory policies, acts and practices in the maritime, logistics and shipbuilding sector.[3]   

As a result, 

• May 29, 2024:  a public hearing took place at the U.S. International Trade Commission. 
   
• January 16, 2025:  the USTR released its Report on China’s Targeting of the Maritime, Logistics and Shipbuilding Sectors for Dominance. The USTR determined that China’s actions were unreasonable and burdened and restricted U.S. commerce and therefore were actionable under section 301 of the Trade Act of 1974, as amended. 
   
• February 21, 2025 (Federal Register Notice published on February 27, 2025):  the USTR issued a Notice of Proposed Action in relation to the investigation (“February Proposals”).[4] The February Proposals included,
  • Service fees on vessel operators of China;
  • Service fees on vessel operators whose fleets were comprised of Chinese-built vessels;
  • Service fees on vessel operators with prospective orders from Chinese shipyards;
  • A requirement for minimum levels of U.S. goods exported on U.S.-flagged and built vessels by U.S. operators, increasing annually; and
  • Actions targeting exposure to and risks from shipping data platforms promoted by China, including the LOGINK platform.
     
• March 24 and 26, 2025:  the USTR’s Office presided over two days of testimony about the February Proposals on March 24 and 26, 2025. Commenting stakeholders included congressional members, representatives of U.S. small carriers and vessel owners, port associations, U.S. exporters, manufacturers, labor unions and lobbyists from multiple sectors, representing U.S. and overseas interests.
   
• April 9, 2025 (Federal Register Notice published on April 15, 2025):  The White House issued Executive Order 14269 – “Restoring America’s Maritime Dominance”.[5] Among other measures, the Order directed the USTR to consider imposing additional tariffs on ship-to-shore (“STS”) cranes and other cargo handling equipment manufactured or assembled in China, or made using components of Chinese origin.
   
• April 17, 2025 (Federal Register Notice published on April 23, 2025):  The USTR  announced fees and restrictions under Annexes I-IV and additional proposed tariffs on STS cranes, containers, and other cargo handling equipment manufactured or assembled in China in a new Annex V under a “Notice of Action and Proposed Action in Section 301 Investigation of China’s Targeting the Maritime, Logistics and Shipbuilding Sectors for Dominance…” (“April 17 Notice”).[6]     

USTR-Mandated Fee Payments Begin on October 14, 2025 (Annexes I – III)

The USTR’s April 17 Notice was not the end of matters regarding port fees and restrictions. Significantly,

• May 19, 2025:  USTR held a public hearing regarding the proposed tariffs on STS cranes and other cargo handling equipment, as set out in Annex V.  
   
• June 6, 2025 (Federal Register Notice published on June 12, 2025):  USTR proposed modifications to Annexes III (vehicle carriers) and IV (vessels transporting LNG).[7]
   
• October 10, 2025:  USTR announced modifications in relation to Annexes III, IV and V, proposed further modifications to the measures and requested comments on the further modifications (“October 10 Notice”).[8]

As a result of the additional proposals in the October 10 Notice, which are now open for public comment, certain aspects of the fees and restrictions remain somewhat unsettled. There are also new dates to note regarding the modified fees.  

Taking into account the modifications and clarifications made by the USTR on October 10, the fees under Annexes I-III that will be due starting October 14, 2025[9] are summarized as follows:  

Annex I: Service Fees on Chinese Vessel Operators and Vessel Owners of China[10]

• For Chinese-owned or operated vessels arriving at a U.S. port, the vessel operator must pay $50 per net ton for the arriving vessel (October 14, 2025); $80 per net ton (April 17, 2026); $110 per net ton (April 17, 2027); and $140 per net ton (April 17, 2028).
   
• The fee will be charged up to five times per year, per individual vessel.
   
• Vessels which make multiple U.S. port calls before transiting to a foreign destination will have fees assessed per rotation or string of U.S. port calls.

Annex II: Service Fees on Vessel Operators of Chinese-Built Vessels[11]

• For Chinese-built vessels arriving at a U.S. port, the vessel operator must pay the higher of two fee calculation methods: 
  • Per Net Ton:  $18 per net ton (October 14, 2025); $23 per net ton (April 17, 2026); $28 (April 17, 2027); and $33 per net ton (April 17, 2028); or
  • Per Discharged Container:  $120 per container (October 14, 2025); $153 per container (April 17, 2026); $195 per container (April 17, 2027); $250 per container (April 17, 2028).
     
• As with Annex I, the fee will be charged up to five times per year, per individual vessel, and vessels which make multiple U.S. port calls before transiting to a foreign destination will have fees assessed per rotation or string of U.S. port calls.
   
• Annex II also includes incentives for ordering and taking delivery of a U.S.-built vessel meeting specified requirements. 

Annex II includes several exemptions. Carriers should examine these exemptions closely, as they can result in substantial savings if they apply. For example, Annex II exempts U.S.-owned or flagged vessels or vessels participating in specific security programs; vessels arriving empty or in ballast; and certain special-purpose vessels.  Perhaps more significantly, however, Annex II exempts smaller cargo vessels (4,000 TEUs or less for container vessels, 55,000 DWT for general cargo vessels, and 80,000 DWT for bulk cargo carriers) and vessels engaged in voyages of less than 2,000 nautical miles.

Annex III: Service Fee on Vessel Operators of Foreign-Built Vehicle Carriers

• For non-U.S. built vehicle carriers arriving at a U.S. port, the vessel operator must pay a fee in the amount of $46 per net ton for the arriving vehicle carrier. The per net ton measure, which was set out in the June 6 Annex III proposed modification and confirmed by the USTR on October 10, is a change from the per car equivalent unit capacity measure announced in the April 17 Notice. The new fee amount is now set at $46 per net ton, which is a significant increase over the $14 per net ton fee from the USTR’s June proposals.[12]
   
• Pursuant to the Targeted Coverage provision of the October 10 Notice, fees will not attach to U.S.-owned or U.S.-flagged vessels enrolled in the Maritime Security Program. This exemption will expire, unless renewed, on April 18, 2029. Fees will not attach to U.S. government vessels (as defined in the Annex).
   
• Under the October 10 Notice, fees will be charged up to five times per year, per individual vessel.  
   
• The June 6 proposals made clear that roll-on/roll-off carriers are subject to the fees. The October Notice does not include the June 6 amendment in the text of the Annex itself, but indicates in the “Clarification to Annex III” section that “vehicle carrier” encompasses that type of carrier.
   
• Fees will attach to all non-U.S. built vehicle carriers, and Annex III also provides for limited fee suspensions.
   
• As with Annexes I and II, fees will be assessed at the first U.S. port or place from outside the customs territory on a particular string.

Fees Are Not Cumulative, and LNG Measures Stand on Their Own 

Fees and restrictions will apply in a set order:

• First, a vessel is subject to Annex IV restrictions, and will not be subject to the fees under Annexes I, II or III.
   
• Second, a vehicle carrier is subject to Annex III fees.
   
• Third, if a vessel is operated by a Chinese entity or owned by a Chinese entity, Annex I will apply.
   
• Fourth, a vessel may be subject to Annex II when Annexes I and III do not apply.

The fees set out in Annexes I, II or III thus will not be cumulative and will apply in line with the ordering described above. Vessels designed for the transport of LNG, which are subject to Annex IV, will not be subject to fees under Annexes I through III at all.   

Annex IV: Addressing Restrictions on Vessels Carrying Exports of LNG

Annex IV sets out restrictions and reporting requirements for vessels carrying LNG exports.  Annex IV includes the following key terms:

• There are no restrictions until April 17, 2028, when vessel-based LNG exports must be exported in increasing percentages by U.S.-built, flagged, and operated vessels. Exports of LNG shall be transported on vessels that receive a license in accordance with Annex IV and meet the annual requirements.
   
• Restrictions will not apply to a particular vessel for up to three years if the vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater LNG capacity.
   
• Under the June 6 proposed modifications, beginning April 16, 2028, the vessel operator would report the amount of LNG exports carried on U.S.-built, U.S.-operated vessels, and the amount of LNG carried on foreign-built and foreign-operated vessels. This was a change to the April 17 measures, which required the LNG terminal to make reports to the Department of Energy under different parameters. The October 10 Notice does not mention the reporting requirements. 
   
• Under the June 6 proposals, the USTR modified the original April 17 measures to remove language authorizing it to direct the suspension of export licenses where carrying requirements are not met. The October 10 Notice confirms the removal of the suspension provision, retroactive to April 17, 2025.

Annex V:  Tariffs on Ship-to-Shore Cranes and Cargo Handling Equipment of China

Annex V, proposed in April 2025, contained new, controversial provisions setting out tariffs on STS cranes manufactured, assembled or made using components of a Chinese origin, or manufactured anywhere in the world by a company owned, controlled or substantially influenced by a Chinese national, and on specified cargo handling equipment of China. This equipment included containers, chassis and chassis parts. The proposed tariff rate for STS cranes was 100%, and between 20% to 100% for containers, chassis and chassis parts.

The USTR invited comments on the proposals set out under Annex V, in advance of a May 19, 2025 public hearing. The proposals generated a significant amount of industry opposition during the comment period.

The USTR’s October 10 Notice sets out the following modified duties:

• 100% duties on STS cranes, as described in Annex V.A.; and
• 100% duties on defined intermodal chassis and chassis parts.

These new Section 301 duties will be assessed beginning on November 9, 2025. 

Recognizing the significant industry concerns about potential impact of STS crane duties being imposed on cranes ordered before the proposed actions, the USTR modified its proposals to state that additional Section 301 duties will not be imposed on STS cranes that fulfil contracts executed prior to April 17, 2025 that also enter the U.S. prior to April 18, 2027.

Intermodal containers are not subject to an additional duty under this Annex, which is a significant change from the proposals made in the April 17 Notice.

Clarifications Under the October 10 Notice

The October 10 Notice clarified some of the grey areas as to the service fees and related exemptions left by the April 17 Notice, but it also left some questions unanswered and also introduced new questions with the new modifications and proposals.  Prior to the October 10 Notice, some of the key grey areas included:

• How the capacity of smaller Chinese-built vessels is defined under the Annex II Targeted Coverage exemption (iii);
   
• The definition of a “voyage of less than 2,000 nautical miles” under Annex II Targeted Coverage exemption (iv) and clarification regarding whether transshipment is allowed; and
   
• The concepts of Chinese “ownership” and “control” under Annex I, particularly in connection with ship financing structures and sublease/subcharter arrangements.

The USTR’s October 10 Notice provides explanation and clarification on some issues.  As to Annexes I through III, for example, the USTR provided a definition of “string” (meaning “a string of port calls”); clarified that vessels excepted from entry under 19 U.S.C. 1441, or otherwise exempted from entry, are not subject to fees under Annexes I-III; and clarified that vessels transiting the Panama Canal is not subject to the requirements for entry from a foreign port unless the vessel loads or unloads cargo or passengers in the Canal.  

As to Annex II specifically, the USTR also provided the following clarifications:

• The meaning of “arriving empty or in ballast”, meaning “when the vessel does not have any cargo or passengers on board”;
   
• Examples of the types of Chinese-built vessels exempted as smaller-capacity vessels under (iii) of the Targeted Coverage provision, and a definitive statement that the 80,000 DWT exemption applies to both liquid and dry bulk vessels;
   
• The exemption for voyages or rotations of less than 2,000 nautical miles under (iv) of the Targeted Coverage provision “is assessed based on the distance actually travelled from the furthest foreign port of call”;
   
• The exemption for “specialized or special purpose-built vessels” used in chemical transport may apply where the vessel is principally identified as an ICST Code 120 Chemical Tanker,

Under Annex III, the USTR also provided definitions of vehicles subject to Annex III.  

Further Proposed Modifications and Remaining Open Questions

The October 10 Notice also creates a measure of uncertainty regarding the operation of certain Section 301 measures by adding and removing Targeted Coverage provisions, suggesting additional tariffs, and also deferring certain fees pursuant to section “H” in the Notice commentary.

In summary, USTR now proposes and requests public comment on the following new measures:

• Annex I:  adding the following Targeted Coverage provision in relation to the carriage of ethane and LPG on Chinese-owned vessels:  “As of October 14, 2025, an LPG carrier (ICST Code 131) or Other Liquified Gas Carrier (ICST 130) that is ordered before April 17, 2025, and is in service and entered into a long-term time charter agreement (that is, 20 years or more) prior to December 31, 2027, will be considered owned and operated by the charterer in the time charter contract”;
   
• Annex II:  removing the Targeted Coverage provision for certain Chinese-built “Laker” vessels;
   
• Annex III:  adding a Targeted Coverage provision for U.S.-flagged vessels of up to 10,000 DWT, which would apply as of October 14, 2025 and expire on April 18, 2029, if not renewed; and
   
• New Annex V.B:  adding a new Annex V.B, imposing additional tariffs of up to 150% on several other types of cargo handling equipment of China. 

The USTR requests comments regarding these proposals by November 10, 2025.

The October 10 Notice also provides for deferred payment until December 10, 2025 for some fees related to certain gas and vehicle carrier vessels under section “H” of the Supplementary Information section of the USTR’s comments: 

“Vessels principally identified under ICST codes 130 (Other Liquified Gas Carrier), 131 (LPG Carrier), 139 (Other Liquefied Gas Carrier), 325 (Vehicle Carrier), 332 (Ro-Ro Passenger), 333 (Other Ro-Ro Cargo), and 338 (Ro-Ro Container) that may be subject to fee modifications proposed in this notice for either Annex I or Annex III of the April 23 notice may defer payment of Annex I or Annex III service fees from October 14, 2025, through December 10, 2025.” 

Direction From CBP

On October 3, 2025, CBP issued a bulletin highlighting that the responsibility is on the vessel operator, not CBP, to determine whether a fee is owed. CBP also provided practical guidance regarding the process for making payment. CBP recommends initiating payment at least three business days in advance of the vessel’s scheduled arrival to avoid clearance delays. Payment must be made through a designated U.S. government website – not at the Port of Entry.

Charterparty Concerns

The imposition of fees for vessel calls at U.S. ports by the USTR gives rise to the risk of disputes under charterparties.

Generally, owners are adopting the position that USTR fees are for charterers’ account, on the basis that they arise out of charterers’ orders for U.S. port calls.

However, some charterers may seek to argue that USTR service fees arise from matters which relate to either the vessel or to owners, which are not matters for charterers. Depending on the charterparty wording in question, there is therefore scope for uncertainty on the legal position and for disputes to arise.

BIMCO USTR Clause for Time Charter Parties 2025

To seek to address this issue, in July 2025 BIMCO published a “BIMCO USTR Clause for Time Charter Parties 2025”, which addresses the service fees under Annex I and Annex II.

Under this BIMCO clause, the prima facie position is that charterers are the party responsible for the service fees under Annex I and/or Annex II, providing that:

• owners accurately declared that the vessel was built in China at the date of the charterparty;
   
• owners accurately declared that the registered owners, the bareboat charterers and/or disponent owners or their managers are a Chinese vessel owner and/or if the vessel operator is a vessel operator of China at the date of the charterparty;
   
• the service fees are not due to any change by the owners of the registered owner, bareboat charterers and/or disponent owners, managers or the vessel operator; and
   
• the service fees were not incurred as a result of the owners’ breach(es) of the charterparty, any off-hire event or any use of the vessel outside of the charterers’ instructions.

Time Charterparty Issues

In the event the BIMCO USTR Clause is not incorporated into a time charter, it may not be clear which party should be responsible for the service fees under Annex I and Annex II.

• Cl. 2 of NYPE 46 and Cl. 7 of NYPE 93 provides that “Charterers, while the Vessel is on hire… shall pay for port charges”. While the term “port charges” refers to a broad range of charges under English law, this has not been expressly defined, so there may be disputes as to whether the USTR service fees fall within the definition of “port charges” and whether charterers would be the party responsible.
   
• Should the service fees under Annex I and Annex II be deemed a “tax” or “due”:
  • Service fees under Annex I and Annex II could be charterers’ responsibility under NYPE 93, where Cl. 37 provides that “Charterers to pay all local, State, National taxes and/or dues assessed on the Vessel or the Owners resulting from the Charterers’ orders…”.
  • In other charterparties, there could be bespoke provisions in the rider clause such as “Any taxes and dues on the vessel and/or Owners shall be for Owners’ account”. In such a case, the responsibility for payment of the service fees under Annex I and Annex II could be for owners’ account.

It is worth bearing in mind that any bespoke rider clauses addressing taxes or port charges are likely to take precedence over printed charterparty clauses to the extent they are in conflict.

Separately, as flagged above, USTR has proposed the following modification to Annex I:

“As of October 14, 2025, an LPG carrier (ICST Code 131) or Other Liquified Gas Carrier (ICST 130) that is ordered before April 17, 2025, and is in service and entered into a long-term time charter agreement (that is, 20 years or more) prior to December 31, 2027, will be considered owned and operated by the charterer in the time charter contract.” [emphasis added]

The USTR has requested public comments to be submitted in respect of the proposed modification by November 10, 2025, and therefore, this proposed modification is not in effect yet.

However, should this proposed modification be confirmed and incorporated, this would mean that the service fees under Annex I could potentially not apply to certain LPG and ethane carriers, even in the event “registered owners, the bareboat charterers and/or disponent owners or their managers are a Chinese vessel owner and/or if the vessel operator is a vessel operator of China at the date of the charterparty”, as long as the charterer under the time charter contract is not a Chinese charterer and the LPG carrier was:

• Ordered before April 17, 2025;
• Is in service; and
• Entered into a long-term charter agreement of 20 years or more prior to December 31, 2027

Voyage Charterparty Issues

At this point in time BIMCO has not published a USTR Clause for voyage charterparties.

As in the case with time charterparties, there are also potential ambiguities in the wording of voyage charterparties as to which party should be responsible for the service fees under Annex I and Annex II.

On the assumption that the service fees under Annex I and Annex II are deemed to be a “tax” or “due”:

• Taking GENCON 1994 and Asbatankvoy 1977 form as examples, in broad terms, dues, charges and taxes on the vessel are for owners’ account, and dues, charges, duties and taxes on cargo or freight are for charterers’ account.
• Service fees under Annex I are calculated on the vessel’s net tonnage and therefore, it could be deemed to be for owners’ account on the basis that the service fees under Annex I are a tax on the vessel.
• However, with regard to the service fees under Annex II, the applicable fee would be the higher of the calculation based on (1) the vessel’s net tonnage or (2) the number of containers discharged. In the event the service fees under Annex II are applied on the basis of the number of containers charged, it might be argued to constitute a due or charge levied on cargo, and therefore, for charterers’ account.

As with time charters, it is also worth bearing in mind the content of any other clauses which could be relevant and vary the position. In the case of Asbatankvoy 1977 form, Cl. 12 provides that “The Charterer shall also pay… any unusual taxes, assessments and governmental charges which are not presently in effect but which may be imposed in the future on the Vessel or freight”.

Overall, it would be preferable for owners and charterers to clearly allocate responsibility for any applicable USTR service fees, and this is best done by way of express charterparty wording (e.g. through the incorporation of a specific clause or an addendum) or for owners and charterers to reach agreement on responsibility for any USTR service fees prior to any voyage orders for U.S. port calls being made. Alternatively, for new charterparties, parties may wish to consider the scope of trading ranges, and whether this automatically includes U.S. port calls if such calls are likely to result in the imposition of USTR service fees.

Conclusion

Given the significant potential impact of USTR service fees, parties should carefully consider whether the fees apply to them in advance of any U.S. port calls. In light of the CBP’s recent announcement, parties should make plans for payment three business days prior to a vessel’s arrival to avoid delays. Parties also should continue to monitor the USTR for further clarifications or other modifications to the Section 301 measures.

Owners and charterers should also clearly allocate responsibility with express contractual wording to minimize disputes as to which party is responsible under charterparties for any applicable USTR service fees. Absent express wording being agreed, there is the potential for disputes to arise, which are likely to be determined on the charterparty wording, which may not be clear, leading to the risk of protracted disputes.

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