Shipowners Adjust Contracts to Prepare for Expected US Tax on Chinese Vessels

Shipowners and charterers are altering leasing contracts to cope with the multimillion-dollar port fees expected to be imposed on Chinese-built vessels by the Trump administration, according to people familiar with the matter.

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The contours of Washington's plan to revitalize the US shipbuilding industry are unclear, and the US Trade Representative (USTR) has yet to make concrete proposals on expected measures, including levies.

Still, the sector is already preparing for imminent additional risk, with new clauses stating that companies hiring Chinese ships will bear the cost of any taxes, in part or in full, the sources said.

Some new provisions in leasing contracts—not unlike those currently used to cover cargo-related expenses—will establish that all duties and taxes, if proposed by the USTR and introduced, will be for charterers to cover, the sources added. Another version caps the amount that a shipowner pays, with the charterer covering the remaining fee.