A new weapon in the US and China’s trade war arsenal, reciprocal port fees, is set to take effect today, Tuesday, 14 October. 

‘Announcement 54’ was made on Friday, 10 October, by the Chinese Ministry of Transport, outlining the special port charges which will apply to US vessels at Chinese ports. This response mirrors the United States Trade Representative’s (USTR) Action on China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for dominance: Section 301.

The USTR’s Section 301 is the culmination of a year-long investigation which began under the Biden administration and found that China has been unfairly targeting these US sectors.

Source: USTR, Skuld, Bloomberg. Current USD-RMB exchange rate is $1=¥7.13

Thus far, tariffs have been the weapon of choice in the US-China trade war, but escalating port fees represent a direct assault on maritime logistics, creating powerful disincentives for freight providers. 

Taking the dispute to the high seas warrants comparisons to colonial-era protectionism in an era of burgeoning mercantilism: a reminder that trade wars are hardly a modern phenomenon.

From Britannia’s rulebook?

The British 17th and 18th-century Navigation Acts resemble, to a certain extent, the form of trade protectionism which China and the US are exhibiting today. The Commonwealth government in 1651 stipulated that goods imported from Asia, Africa, or America could only travel to any England or any English colony in English ships. Historians critical of the Navigation Acts argue that this system drove up freight prices and ultimately made English-manufactured goods less competitive. 

Building on the Navigation Acts, early US trade policy also imposed tonnage duties which resemble modern port fees in some aspects. Under the Tariff of 1789, American carriers were charged lower cargo fees than those imposed on foreign boats importing similar goods. 

Historian John Miller describes how the fundamental shift in American commerce from Britain to France was facilitated through port fees. Representative and later President James Madison suggested that  British ships should pay a duty of 60 cents per ton upon entry into an American port; French ships, on the other hand, should only pay 30 cents. 

This, Madison admitted, was “the equivalent to levying economic war upon Great Britain”, who, since American independence, had refused to even discuss a commercial treaty with the US.

Eventually, President George Washington signed into effect a bill by which, as Miller summarised, “All foreign-owned ships (except those built in the United States) paid a duty of 50 cents per ton, while American-owned ships paid only six cents per ton.” Yet the majority of this duty’s burden fell on southern staple crop exporters.

The colonial era, in which the Navigation Acts and the post-Independence America shipping policies were drafted, was one of intense mercantile competition as global trade itself was in its nascent stages. At this point, the mechanisms and financial instruments that freight is still governed by were being whittled into the very same structures still recognisable today.

History often rhymes, and it sometimes repeats

The next notable use of port fees came in 1997, two centuries and two world wars later, when the US implemented per-voyager fees on Japanese vessels. 

Under this measure, a fee of $100,000 was charged on any container-carrying liner vessel owned or operated by a Japanese carrier (Kawasaki Kisen Kaisha, Nippon Yusen Kaisha, and Mitsui OSK Lines) entering a US port from abroad. 

The US Federal Maritime Commission (FMC) imposed these fees in response to wider US-Japan disputes across trade and transport:

• In civil aviation, the US pushed for an ‘open skies’ agreement to liberalise capacity between the two countries. Japan resisted, citing concerns of US carriers (FedEx, United, Northwest) dominating international routes through ‘beyond rights’ – that is, the ability to fly cargo or passengers onward to third countries.
• Following the 1995 US–Japan Auto and Auto Parts Agreement, US officials accused Japan of failing to open its domestic parts market. Japan argued that it had met its obligations, raising tension.
• Parallel talks on insurance, telecommunications, and port services, under the Clinton administration’s Framework Talks initiative, formed part of a broader US effort to pry open Japan’s protected markets.

The FMC reserved the authority to impose per-voyage fees up to $1,000,000 if the above issues were not resolved, but the two countries reached a final agreement on 27 October 1997, after Japan agreed to pay $1.5 million and reform its port practices.

The parallels between the 1997 US-Japan dispute and today’s US-China tensions jump out immediately. Both involved the US confronting the dominant Asia-Pacific (APAC) economy of the era. In each case, port fees served as economic muscle-flexing – epitomised by the $1,000,000 threat wielded against Japan. In both cases, port fees were a pawn in a wider chess game vying for dominance in international trade.

But there are also some crucial differences. The fee structures differ: $100,000 per vessel in 1997 versus $50 per ton today. While direct comparison proves difficult, the scale becomes clear when considering that a typical Chinese 15,000 TEU container ship with 80,000 net tons would now face $4,000,000 in fees at US ports.

Most importantly, the difference lies in retaliation. In 1997, the Japanese Ministry of Foreign Affairs (MOFA) protested the sanctions, arguing they violated the ‘Treaty of Friendship, Commerce, and Navigation between Japan and the US’. Japan also amended some licensing requirements under their Port Transportation Business Law. 

China, by contrast, has retaliated measure-for-measure. This symmetrical response signals that the US no longer commands unquestioned deference in international trade disputes.

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In related news, Chinese President Xi Jinping unveiled export controls on rare-earth minerals, which require foreign companies to gain Beijing’s approval to export magnets which contain even trace amounts of China-sourced rare-earth materials: a move argued to mirror the US foreign direct product rule. In response, Trump threatened an additional 100% tariffs on Chinese imports – on top of the current 30% rate. Dripping in irony, US Treasury Secretary Scott Bessent today declared, “If they [China] want to slow down the global economy, they will be hurt the most.” 

The full consequences of this trade war will not be known for at least a few years; beyond market fluctuations (which eventually taper out), such has been the pattern of tariff frenzies. Port fees, though, are an immediate disincentive to logistics providers, and the effects in diverting container traffic will be far more perceptible: over the weekend, a number of US ships bound for China turned around following Friday’s ‘Announcement 54’. 

As centuries of globalisation give way to fragmentation and isolationism – or at least American isolationism – the introduction of port fees as a method of trade war places the maritime logistics sector on the front lines of economic conflict.