Update 4 November 2025
The White House announced that enforcement of the USTR service fees will be suspended on 10 November 2025.
Special update 30 October 2025
In a significant diplomatic development, US President Donald Trump and Chinese Premier Xi Jinping have decided to suspend reciprocal port charges for one year following a meeting in South Korea on Thursday 30 October 2025.
Updated 22 October 2025
Navigating the United States Trade Representative (USTR) Notice of Action in Section 301 investigation of China’s targeting the maritime, logistics, and shipbuilding sectors for dominance (“USTR 301 China Service Fee”)
Navigating the intricacies of the USTR 301 China Service Fee involves understanding the new regulations and fees imposed by the USTR on various maritime transport services with a Chinese nexus. These measures are part of a broader effort by the US government to address China's strategic initiatives in the maritime, logistics, and shipbuilding sectors.
Section one of this article provides an overview of the USTR 301 China Service Fee and addresses frequently asked questions (FAQ). Section two examines the impact of the USTR 301 China Service Fee on charter parties.
Section one - Framework and FAQs
What is the USTR Section 301 China Service Fee?
On 17 April 2025, the USTR issued a Notice of Action imposing specific service fees on maritime transport services provided by Chinese operators and shipowners, Chinese-built vessels, and foreign-built vehicle carriers. Additionally, certain maritime transport services for US Liquefied Natural Gas (LNG) will be restricted. Then, on 10 October 2025, the USTR issued a Notice of Modification and Proposed Modification modifying certain initial provisions. The latest Notice was published in the Federal Register on 16 October 2025 and is available here.
What are the fees imposed, and where can they be found?
The fees and restrictions are detailed in five separate Annexes found in the 17 April 2025 Notice of Action and in part revised by the 10 October 2025 Notice of Modification:
| Annex | Description |
| I | Service fee on Chinese vessel operators and vessel owners of China |
| II | Service fee on vessel operators of Chinese-built vessels |
| III | Service fee on vessel operators of foreign-built vehicle carriers |
| IV | Restriction on certain maritime transport services (LNG) |
| V | Tariffs on ship-to-shore (STS) cranes and cargo handling equipment of China |
Annex V implements tariffs (import duties) on certain cranes and cargo handling equipment and is not applicable to vessels coming to the United States.
Are the fees cumulative?
No, the various fees are not cumulative. LNG vessels are subject only to Annex IV, while non-US built vehicle carriers are subject solely to Annex III. For all other vessels, it must first be determined whether the Annex I fees apply. If Annex I fees do not apply, then Annex II fees on Chinese-built vessels may be applicable.
When will the first fees be imposed?
The fees were implemented on 14 October 2025.
Who is responsible for paying the fees?
The operator of the vessel is responsible for paying the fees on the US Department of the Treasury’s secure website pay.gov. The fees cannot be paid at the port of entry.
Annex I: Service fee on Chinese vessel operators and vessel owners of China
Who is the “Vessel Owner”?
In the Notice of Action, the term ‘‘vessel owner’’ means the entity which is identified as the owner of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (CBP Form 1300) or its electronic equivalent.
The Vessel Entrance or Clearance Statement (CBP Form 1300) does not provide a definition of “owner”. However, US Customs and Border Protection (CBP) Area Port Houston/Galveston issued a Trade Information Notice #66448963 on 6 October 2025 clarifying that the vessel owner will be determined by the vessel’s Registry.
Who is the “Vessel Operator”?
The term ‘‘vessel operator’’ means the entity which is identified as the operator of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (CBP Form 1300) or its electronic equivalent.
The Vessel Entrance or Clearance Statement (CBP Form 1300) defines a vessel operator as “Operator as listed on the Certificate of Financial Responsibility (COFR), water pollution: unless other verifiable charter or lease arrangement indicates otherwise”.
CBP Area Port Houston/Galveston issued a Trade Information Notice #66448963 on 6 October 2025 clarifying that the vessel operator will be verified through review of the Certificate of Financial Responsibility (COFR). Ports may also request other verifiable agreements like a Bridge Letter or Continuous Synopsis (CSR).
Who is a “Vessel owner of China” or a “Vessel operator of China”?
Annex I broadly defines a “Vessel owner of China” or a “Vessel operator of China”. This includes owners/operators headquartered in the People’s Republic of China (PRC), Hong Kong, or Macau, as well as any entity “controlled by” or subject to the jurisdiction of these regions.
Annex I encompasses any entity with the following conditions:
| Conditions | Details |
| Country of citizenship | PRC, Hong Kong, or Macau on the VECS submitted to the US CBP office upon entry into the US |
| Headquarters location | PRC, Hong Kong, or Macau |
| Ownership or control | Owned or controlled by a citizen or citizens of the PRC, Hong Kong, or Macau |
| Jurisdiction or direction | Owned by, controlled by, or subject to the jurisdiction or direction of the PRC, Hong Kong, or Macau |
| Entity nationality | National or resident of the PRC, Hong Kong, or Macau |
| Entity Organisation | Organised under the laws of, or having its principal place of business in the PRC, Hong Kong, or Macau |
| Voting interest | 25% or more of the entity’s outstanding voting interest, board seat, or equity interests held by the governments of the PRC, Hong Kong, or Macau, or any citizen subject to their jurisdiction |
| Ocean common carrier | Operating assets directly or indirectly owned or controlled by the governments of the PRC, Hong Kong, or Macau |
How are the fees calculated under Annex I, and who is required to pay?
For all vessels subject to Annex I, upon entry into the US, the operator of the vessel will be required to pay CBP a fee calculated based on the vessel's net tonnage.
| Effective date | Fee per net ton |
| 14 October 2025 | $50 |
| 17 April 2026 | $80 |
| 17 April 2027 | $110 |
| 17 April 2028 | $140 |
What should members do if they wish to modify the ‘operator’ responsible for the COFR?
There are multiple operator “candidates” in the COFR regulations. Any members contemplating modifying the “operator” responsible for the COFR should first consult with their domestic insurance company issuing the COFR guarantee to ensure the new entity has proper legal standing to be named as COFR operator.
Does the Annex I fees apply to finance leases?
The Annex I will likely apply to ship finance arrangements involving a sale-leaseback, where the registered owner is a Special Purpose Vehicle (SPV) controlled by a Chinese leasing entity. These arrangements typically specify that charterers are responsible for operational costs, including such fees. Members are advised to review their leasing agreements, as they may contain specific provisions regarding this matter.
Would a foreign owner having a Hong Kong-based company registration to maintain a vessel’s Hong Kong flag be considered a “vessel owner of China”?
There is some ambiguity regarding this matter. A foreign company can register its vessel under the Hong Kong flag by registering the owning company in Hong Kong as a foreign entity. It is unclear whether this will be regarded as ownership by a Hong Kong company. If the Hong Kong-flagged vessel's registered owner has an address in Hong Kong and identifies the "Country of citizenship" as Hong Kong on the vessel entrance or clearance statement to CBP, the owner will likely be considered a "vessel owner of China" under Annex I (e)(1).
How frequently will the fee be charged each year, and when does the year start for calculating the maximum of five fee assessments per year?
The fee will be charged up to five times per year per vessel for Annexes I and II. Annexes I & II do not define “per year”. However, in the 10 October 2025 Notice, the USTR advised that Annex III fees would be charged “per calendar year”. It is likely that Annexes I and II fees will then also be charged “per calendar year”.
Do the fees apply per port call or per rotation?
The Notice of Action provides that the fees are assessed once “on a particular string” on or before the entry of the vessel at the first US port. On 10 October 2025, the USTR clarified that the term “string” means a “string of port calls”.
Annex II: Service fee on vessel operators of Chinese-built vessels
A Chinese-built vessel not subject to the Annex I fees can be subject to the Annex II fees.
How is a Chinese-built vessel defined?
A Chinese-built vessel is defined as one built in the PRC and identified as such on the Vessel Entrance or Clearance Statement (VECS) submitted to the US CBP office upon entry into the US.
How much should a Chinese-built vessel pay?
Upon entry into the US, the operator of a Chinese-built vessel must pay the higher of:
| Effective date | Fee per net ton | Fee per container |
| 14 October 2025 | $18 | $120 |
| 17 April 2026 | $23 | $153 |
| 17 April 2027 | $28 | $195 |
| 17 April 2028 | $33 | $250 |
Which Chinese-built vessels are exempted from the Annex II fees?
| Exemptions for Annex II fees | Description |
| (i) | US-owned or US-flagged vessels enrolled in the Voluntary Intermodal Sealift Agreement, the Maritime Security Program, the Tanker Security Program, or the Cable Security Program |
| (ii) | Vessels arriving empty or in ballast |
| (iii) | Vessels with a capacity 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 |
| (iv) | 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 |
| (v) | US-owned vessels, where the US entity owning the vessel is controlled by US persons and is at least 75 per cent beneficially owned by US persons |
| (vi) | Specialised or special-purpose-built vessels for the transport of chemical substances in bulk liquid form |
| (vii) | Vessels principally identified as “Lakers Vessels” on CBP Form 1300, or its electronic equivalent. However, on 10 October 2025, the USTR proposed to strike this exemption and replace it by 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.” |
Do the exemptions to Annex II fees (Chinese-built vessels) also apply to Annex I fees (owners or operators of China)?
No, the exemptions only apply to Annex II fees related to Chinese-built vessels.
If the Annex II fee applies per container, is it adjusted depending on the container size?
There is no specific guidance from the USTR but Annex II uses the definition of “container” in Article 1 of the Customs Convention on Containers, which does not differentiate between 20-foot and 40-foot containers.
Would Annex II fees apply to containers discharged in Canada and Mexico with an ultimate destination in the US?
It might, as the operator must report the total number of containers discharged “with an ultimate destination in the Customs territory of the United States”.
Does the exemption for vessels with a capacity equal to or less than 55,000 deadweight tons apply to all types of vessels?
This exemption should apply to all types of Chinese-built vessels with a capacity of 55,000 deadweight tons or less as properly identified on the vessel’s register.
What does a vessel with an “individual bulk capacity of 80,000 deadweight tons” mean?
On 10 October 2025, the USTR clarified that this exemption applies to both liquid bulk and dry bulk vessels, e.g., ICST Codes 210 (Other Bulk/Oil Carrier), 211 (Ore/Bulk/Oil), 212 (Oil/Ore), 213 (Bulk/Oil), 220 (Other Bulk Carrier), 221 (Ore Carrier), 222 (Bulk/Container Carrier), 229 (Other Bulk Carrier), and 323 (Irradiated Fuel Carrier).
What does a vessel “specialised, or special purpose-built vessels for the transport of chemical substances in bulk liquid forms” mean in Annex II?
The term “specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms” applies to vessels identified as ICST Code 120 (Chemical Tanker).
Are all Chinese-built chemical tankers “specialised for transporting chemical substances in bulk liquid form” exempt from Annex II fees?
It appears so irrespective of the vessel’s deadweight tonnage (DWT).
Can the fees on a certain Chinese-built vessel be suspended?
The fees on a particular vessel will be suspended for a period not exceeding three years if the vessel owner orders and takes delivery of an equivalent US-built vessel.
How frequently will the fee be charged each year, and when does the year start for calculating the maximum of five fee assessments per year?
The fee will be charged up to five times per year per vessel for Annexes I and II. Annexes I & II do not define “per year”. However, in the 10 October 2025 Notice, the USTR advised that Annex III fees would be charged “per calendar year”. It is likely that Annexes I and II fees will then also be charged “per calendar year”.
Do the fees apply per port call or per rotation?
The Notice of Action provides that the fees are assessed once “on a particular string” on or before the entry of the vessel at the first US port. On 10 October, 2025, the USTR clarified that the term “string” means a “string of port calls”.
Annex III: Service fee on vessel operators of foreign-built vehicle carriers
The 17 April Notice of Action provided that, starting 14 October 2025, any non-US-built vehicle carrier would be required to pay a fee of $150 per car equivalent unit capacity of the vessel. On 6 June 2025, a USTR Notice of Proposed Modification proposed that the fee be changed to $14 per net ton of the vessel and certain exemptions for vehicle carriers entered in the US Maritime Security Program. Public comments following the Notice of Proposed Modification were made and largely opposed the upcoming fees on non-US built vehicle carriers. However, on 10 October 2025 established a $46 per net ton fee for non-US built vehicle carriers.
What is the definition of a vehicle carrier?
Under the Notice of Action, a vehicle carrier is defined as “a vessel principally identified as a “Vehicle Carrier” on CBP Form 1300, or its electronic equivalent.” It adds that “for information only, a vessel is normally principally identified as a vehicle carrier when the vessel is designed for wheeled or tracked cargo that can load itself on-board. Cargo generally drives onto the vessel through decks via ramps, rather than being lifted through hatches”.
On 10 October 2025, the USTR clarified that a “Vehicle carrier” includes vessels under ICST codes 325 (Vehicle Carrier), 332 (Ro-Ro Passenger), 333 (Other Ro-Ro Cargo), or 338 (Ro-Ro Container).
How many times a year will the fee apply under Annex III?
Annex III fees will be charged up to five times per calendar year, per vessel.
Can the fees under Annex III be suspended?
The fees on a particular vessel will be suspended for a period not exceeding three years if the vessel owner orders and takes delivery of an equivalent US-built vessel.
Are there any exemptions?
US-owned or US-flagged vessels enrolled in the Maritime Security Program and US Government vessels are exempted. The USTR also proposes to add a third exemption for US-flag vessels of up to 10,000 DWT and invites public comments on this point by 10 November 2025.
Annex IV: Restriction on certain maritime transport services (LNG)
Starting 17 April 2028, 1% of LNG exports from the US shall be transported on US-flagged and US-operated vessels, with a gradual increase to 15% by 2047. The 17 April 2025 Notice of Action provided that LNG export licenses would be revoked if the applicable thresholds are not met. However, on 10 October 2025, the USTR Notice of Proposed Modification eliminated the term providing for suspension of export licenses.
Section two - the impact of the USTR 301 China Service Fee on charter parties
What effect will the USTR 301 China Service Fee have on charter parties?
According to Annexes I to III, the vessel operator is responsible for calculating, reporting, and remitting fees. However, parties may have agreed to distribute liability differently in their contracts. The specifics will depend on the contractual language and the nature of the fee, tax, or port charge.
Existing charter parties
Members should review their existing charter parties to ensure that they understand the consequences of exposure to the USTR 301 China Service Fee.
Under most standard time charters, charterers would likely be ultimately responsible for the USTR 301 China Service Fee, but the position is not entirely straightforward and there may be special circumstances, additional provisions or amendments in the charter that make owners responsible. Owners should also bear in mind that it is the operators who will be obliged to pay the service fee initially. In view of the potential size of the service fee, charterers may attempt to dispute responsibility if there is any arguable basis for doing so.
Under most standard voyage charters, owners/disponent owners are likely to be responsible for the USTR 301 China Service Fee, but again, the charter may contain specific provisions which alter the position. In fact, the Asbatankvoy form provides that charterers are responsible for “any unusual taxes, assessments, and governmental charges that are not currently in effect but may be imposed in the future on the Vessel”.
Frustration
It is generally not sufficient to frustrate a contract because it has become more expensive to perform. The fact that it has become more onerous or more costly for one party than he thought is not sufficient to bring about a frustration, (The Euginia [1963] 2 Lloyd’s Rep. 381 at 390 (per Lord Denning M.R.) 1
Force majeure
Under English Common Law, there is no generally applicable concept of force majeure; instead, the applicable common law doctrine is frustration. Force majeure will only be relevant if the parties have included a relevant clause in the contract.
Many contracts include force majeure clauses, which depend on their specific wording and the event in question.
While standard time charters will typically not contain such clauses, many voyage charters and COAs include them. If broadly defined, covering any event beyond the affected party's control, the USTR 301 China Service Fee might qualify as a force majeure event.
Additionally, some clauses may encompass 'hardship' terms that could be applicable.
Future charter parties
If the charter requires or allows the vessel to trade to the US and if the vessel would be subject to the USTR 301 China Service Fee, it would be sensible for members (whether owners or charterers) to insert a specially agreed clause into future charters making responsibility for the service fee clear.
There are a number of clauses in circulation which achieve this result. Many of these clauses seek to make charterers expressly responsible. Some of those clauses give owners additional protection by providing that they are entitled to refuse to proceed to the US unless charterers advance funds for the service fee. Other clauses (which may be appropriate where the vessel is Chinese-owned, operated or built) make owners expressly responsible for the service fee.
Where neither owners nor charterers are willing to pay the service fee, it may be appropriate to exclude US trading.
Both BIMCO and INTERTANKO have published standard clauses to address the allocation of compliance and financial responsibilities for the USTR service fees in charter parties. The BIMCO USTR Clause for Time Charter Parties 2025 is accessible here.
The INTERTANKO US Chinese Nexus Fees Clause for Voyage charters/time charter trips is accessible here.
Time bars
Members should check their contracts for any time limits in particular there may be clauses requiring claims to be notified within relatively short periods.
Due diligence
Given the significant size of the fees, determining whether a party can fulfil their obligations under the charter party is crucial. Therefore, it is essential for Members to conduct thorough due diligence on their counterparties to ensure they are financially secure and capable of meeting any charter party obligations.
Intermediate charters
The USTR 301 China Service Fee will pose significant challenges for charterers in the middle of a charter party chain if all relevant terms are not strictly back-to-back. These terms encompass not only the allocation of liability for the USTR 301 China Service Fees but also associated clauses, including time limits, and law and jurisdiction provisions.
Mediation
Mediation is an alternative to arbitration or litigation, in which a neutral third party helps resolve disputes. It is non-binding unless a settlement agreement is signed and confidential. Mediation lets parties explore options and maintain control over negotiations.
Given the changing landscape of geopolitical events, members may wish to consider inserting the BIMCO/LMAA Arbitration clause, which provides for both mediation and arbitration.
Assisting members
The association has a global team focused on trade and geopolitical issues to support members. For questions or assistance, please contact your Skuld claims handler. Updates will be provided in the FAQ section as the situation evolves.
Acknowledgements
Winter & Co, Glenn Winter
Reed Smith LLP, Leigh Hansson
Reed Smith Richards Butler LLP, Lianjun Li