Now vessels repaired outside the US will also suffer protectionist attack

It is not just COSCO – the new version of the US Trade Representative’s SHIPS for America Act will impose a 70% tonnage tax penalty on any vessel repaired in a non-US yard, with a 200% duty imposed on a Chinese-repaired vessel.

Senators Mark Kelly and Todd Young, and Representatives John Garamendi and Trent Kelly reintroduced the Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act in Congress last Wednesday.

Extending liability beyond vessels with their keels laid in Chinese shipyards – which encompasses the vast majority of existing newbuild orderbooks – this means that many vessels which were originally built outside of China, but are repaired there, will be slapped with a massive tonnage tax penalty.

Hapag-Lloyd’s Copiapo-class, for example, was built a decade ago at South Korea’s Samsung Heavy Industries (SHI) for Chilean shipping line Compania Sud Americana de Vapores (CSAV), before being brought into Hapag-Lloyd fleet following a merger. But recently a decision was taken to send the vessels to COSCO Zhoushan Shipyard for ‘jumboisation,’ bringing them up from 9,324 TEU to around 10,200 TEU, and likely putting them in USTR’s firing line.

Just in case, the newest draft also has provisions to prevent future presidents from lowering fees. The goal, as ever, is to increase the size of the US shipping fleet to 250 vessels, and encourage international companies to relocate their manufacturing and fabrication facilities to the US. 

“Building and staffing more US-flagged ships will create good-paying American jobs, make our supply chains more resilient, lower costs, and strengthen our ability to resupply our military at times of war,” said Senator Mark Kelly. “We’ll keep working with our colleagues in Congress, this administration, and our partners in the industry to make our country safer and competitive by passing the SHIPS for America Act.”