China’s Commerce Ministry said on Tuesday it was banning dealings by Chinese companies with five US subsidiaries of South Korean shipbuilder Hanwha Ocean, as Beijing and Washington escalate trade tensions in the shipbuilding and shipping sectors.
The ministry also announced that it was investigating a probe by Washington into China’s growing dominance in global shipbuilding.
The US Trade Representative launched the Section 301 trade investigation in April 2024, determining that China’s strength in the industry was a burden to US businesses.
The sanctioned entities are Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC and HS USA Holdings Corp.
International shipping and shipbuilding have become a recent focus of trade friction between Washington and Beijing, with each side imposing new port fees on the other’s vessels.
In late 2024, Hanwha acquired the Philly Shipyard in Pennsylvania for $100 million. It announced in August that it plans to invest $5 billion in new docks and quays as part of its support for US efforts to restore globally competitive shipbuilding capacity.
Trade war reaches global shipping lanes
The United States and China on Tuesday began charging port fees on ocean shipping firms that move everything from holiday toys to crude oil, making the high seas a key front in the trade war between the world’s two largest economies.
China said it had started collecting the special charges on US-owned, operated, built or flagged vessels, but clarified that Chinese-built ships would be exempt from the levies.
In details published on Tuesday by state broadcaster CCTV, China set out specific provisions on exemptions, including for ships built by China and empty ships entering Chinese shipyards for repair.
The China-imposed port fees are collected at the first port of entry on a single voyage or for the first five voyages within a year, following an annual billing cycle beginning on April 17.
Earlier this year, President Donald Trump’s administration announced plans to levy fees on China-linked ships to loosen that country’s grip on the global maritime industry and bolster US shipbuilding.
An investigation during former President Joe Biden’s administration concluded China uses unfair policies and practices to dominate the global maritime, logistics and shipbuilding sectors, clearing the way for those penalties. The US is scheduled to also begin collecting fees on October 14.
Analysts warn of market disruption
Analysts expect China-owned container carrier COSCO to be most affected, shouldering nearly half of the segment’s expected $3.2 billion cost from those fees in 2026. China hit back last week, saying it would impose its own port fees on US-linked vessels from the same day.
Jefferies analyst Omar Nokta noted that 13% of crude tankers and 11% of container ships in the global fleet would be affected.
“This tit-for-tat symmetry locks both economies into a spiral of maritime taxation that risks distorting global freight flows,” Athens-based Xclusiv Shipbrokers Inc said in a research note.
In a reprisal against China curbing exports of critical minerals, Trump on Friday threatened to impose additional 100% tariffs on goods from China and introduce new export controls on “any and all critical software” by November 1.
Administration officials, hours later, warned that countries voting in favour of a plan by the United Nations’ International Maritime Organization (IMO) to reduce planet-warming greenhouse gas emissions from ocean shipping this week could face sanctions, port bans or punitive vessel charges.
China has publicly supported the IMO plan. “The weaponisation of both trade and environmental policy signals that shipping has moved from being a neutral conduit of global commerce to a direct instrument of statecraft,” Xclusiv said.
