President Donald Trump has already perturbed markets and boosted the risk of a recession with his draconian worldwide tariff scheme — but there's another plan from his administration, less noticed by the media, that could also devastate U.S. markets, said Flexport CEO Ryan Petersen, and it concerns expensive new fees on container vessels bringing goods into America.
Specifically, wrote Petersen, "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."
This mandate, which comes as a controversial dockworkers' union just secured a promise, with Trump's blessing, to restrict automation at U.S. ports and reduce their competitiveness, is going to decimate U.S. trade and the local economies of second-tier coastal cities for a number of reasons, Petersen continued.
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"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," wrote Petersen. "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."
Meanwhile, he noted, large ports like New York, Los Angeles, and Houston, will be unable to handle all the extra traffic of ships skipping their old stops at smaller ports and delivering directly to them, with the result that they are "likely to become congested, similar to what we saw during Covid."
But perhaps the "craziest" aspect of the proposal, wrote Petersen, is a mandate for 15 percent of all U.S. exports to travel on an American-made ship by 2032.
"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," wrote Petersen. "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. One shipyard in China made more commercial ships last year than the total number the U.S. has produced since World War Two."
"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," concluded Petersen. "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."