Taxes are like stray bullets; they sometimes miss their targets. Among the slew of taxes announced or considered by Donald Trump, one in particular – imposing a fine of several million dollars per stop at an American port on shipowners whose vessels are built in China or fly the Chinese flag – could seriously harm his country's economy. Intended to revive American shipyards, it is causing alarm among shipowners worldwide, who are expected to pay the federal government up to $52 billion annually, according to estimates from the maritime broker Clarksons.
The United States ranks only 19th globally in the shipbuilding industry, far behind China, which holds half of the market. This dominance gives the Asian power "power over global supply, prices, and access," said Jamieson Greer, the US trade representative, on February 21, following an investigation launched under the Biden administration at the request of five unions. With this proposed fine, Trump's protectionist agenda is reaching its peak, targeting not only foreign goods but also the ships that transport them.
Trade penalized
The first drawback is that it could create logistical chaos. Ships will stop servicing small ports to avoid paying this extra cost and will arrange to unload all their goods in one place. This guarantees port congestion. However, this argument may carry little weight given that the American administration is no stranger to chaos.
Furthermore, this tax is worse than a tariff since it is not calculated as a percentage and does not differentiate between a luxury sedan and a banana. Jared Gale, head of the Dole Food Company, a fruit company, explained to the trade representative's office that it would cause banana prices to soar. Unlike the tariffs imposed by Trump on steel, aluminum or automobiles, which encourage American companies to produce domestically, the US will struggle to grow bananas unless they manage to relocate a tropical climate to their country.
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