New BIMCO clause to target legal uncertainty from US tariffs on China-linked vessels

BIMCO Develops New Clause to Address Legal Uncertainty from US Tariffs on China-Linked Vessels

Denmark-based shipping association BIMCO has initiated the creation of a standard industry clause to address the contractual uncertainties arising from the United States Trade Representative’s (USTR) imposition of tariffs on vessels connected to China that dock at US ports.

The USTR’s proposal to levy tariffs on vessels built in China or owned by Chinese companies in response to China’s Section 301 investigation targeting maritime, logistics, and shipbuilding sectors has faced criticism. The initial plan included fees of up to $1.5 million, which drew scrutiny from various corporations and organizations.

In April, the US government reintroduced the tariffs based on net tonnage or containers, starting at $18/NT or $120 per container. BIMCO representatives have voiced concerns that the tariffs could strain consumers, maritime stakeholders, and supply chains without offering a comprehensive solution.

With China’s significant vessel-building capacity compared to the US, BIMCO Secretary General & CEO David Loosley warned that the tariffs would raise the cost of seaborne trade to and from the US and create contractual challenges for the shipping industry.

Recognizing the complexities, BIMCO’s Documentary Committee is prioritizing the drafting of clauses to assist the shipping industry in navigating the new regulations. A subcommittee has been formed to work on the clause, which is expected to be released soon.

Despite the theoretical applicability of the fees, practical challenges exist as few ship owners operate fleets without any vessels constructed in China. Shipyards in China secured the majority of orders in 2024, underscoring the potential impact of the tariffs on the shipping sector.

The World Shipping Council (WSC) cautioned that the tariffs could harm US consumers, businesses, and exporters while potentially failing to induce policy changes in China. COSCO Shipping and the China Association of National Shipbuilding Industry have also criticized the US tariffs, warning of negative repercussions for the maritime industry.