The Trump administration’s proposed steep fees on Chinese-built commercial vessels has the potential to strain cross-border trade between Mexico and the U.S.
Under the proposal announced Friday by the U.S. Trade Representative (USTR), ships constructed in China would face fees of up to $1.5 million per U.S. port call. Vessel operators with a Chinese-built ship in their fleet could be charged $500,000 per ship per call.
Jordan Dewart, president of Redwood Mexico, said shippers diverting substantial cargo volumes to Mexico’s ports to avoid the fees could provide some limited, short-term relief, but it’s unlikely to become a huge shift in shipping trends.
“While the proposed fees directly target vessels entering U.S. ports, there could be indirect repercussions for ships calling Mexico. Shipping companies might reroute Chinese-built vessels to Mexican ports (Manzanillo and Lazaro) to avoid these fees,” Dewart told FreightWaves in an email. “This diversion could increase traffic and congestion in these ports, potentially straining their resources; Mexican West Coast ports just do not have the same infrastructure or efficiencies that U.S. ports do.”
Redwood Mexico is the cross-border shipping arm of Chicago-based fourth-party logistics provider Redwood Logistics.
Dewart said Chinese ships diverting to Mexican ports to avoid U.S. fees could also disrupt Mexico’s commercial rail system.
“Even the Kansas City Southern rail service from the Port of Lazaro Cardenas to Texas would be totally overwhelmed with lack of chassis, slots etc.,” Dewart said.
As of Tuesday, the SONAR Inbound Ocean Twenty-foot Equivalent Unit (TEU) Volume Index shows that import container bookings from China to Mexico (IOTI.CHNMEX) are up 74% week over week and 61% from the same year-ago period.
The Trump administration said the fees on Chinese-built and -operated ships aim to counter China’s dominance in global shipbuilding and maritime transport.
China’s shipbuilding market share grew from less than 5% in 1999 to more than 50% in 2023, according to the USTR. China’s ownership of the global commercial fleet increased to more than 19% as of January 2024. The country also controls 95% of shipping container production and 86% of the world’s supply of intermodal chassis.
Dewart predicted the fees on Chinese ships could help Mexico see a rise in its role as a transshipment hub.
“Goods destined for the U.S. might first arrive at these ports and then be transported overland into the U.S. to circumvent maritime fees,” Dewart said.
However, costs of shipping to Mexico are much higher than to ports on the U.S. West Coast, which could negate any savings on Chinese ship fees, Dewart said.
“Plus the extra handling and inland over-the-road fees just does not seem like it would ultimately be cost (or time) effective,” Dewart said. “I believe though if any attempt was made to route vessels via Mexico, the U.S. would quickly counteract these measures with tariff responses.”
U.S. importers could bear the brunt of the fees on Chinese carriers and ships, according to a report published by Amsterdam-based ING Wholesale Banking on Monday.
“This means that a significant portion of imports entering the U.S. via ports would be directly subject to hefty fines, as these additional expenses would likely be passed on from the carrier to shippers and, ultimately, to importers and exporters. And if we look at the huge total orderbook of new more efficient vessels, carriers ordered more than 60% with Chinese shipyards. This means China’s dominance is set to rise over the next few years,” the ING Wholesale Banking report said.
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