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US, China begin collecting port fees on each other's

vessels

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China says Chinese-built ships exempted from its levies

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China sanctions Korean shipbuilder for 'helping US';

launches

probe

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US aims to loosen Chinese dominance in global maritime,

bolster

US shipbuilding

By Lisa Baertlein, Liz Lee and Joe Cash

BEIJING/LOS ANGELES, Oct 14 (Reuters) - The U.S. and

China on Tuesday began charging additional 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.

A return to an all-out trade war appeared imminent last week,

after China announced a major expansion of its rare earths

export controls and President Donald Trump threatened to raise

tariffs on Chinese goods to triple digits.

But after the weekend, both sides sought to reassure traders and

investors, highlighting cooperation between their negotiating

teams and the possibility they could find a way forward.

China said it had started to collect the special charges on

U.S.-owned, operated, built or flagged vessels but clarified

that Chinese-built ships would be exempted from the levies.

In details published by state broadcaster CCTV, China

spelled out specific provisions on exemptions, which also

include empty ships entering Chinese shipyards for repair.

Similar to the U.S. plan, the new China-imposed fees would

be collected at the first port of entry on a single voyage or

for the first five voyages within a year.

"This tit-for-tat symmetry locks both economies into a

spiral of maritime taxation that risks distorting global freight

flows," Athens-based Xclusiv Shipbrokers said in a research

note.

Early this year, the Trump administration announced plans to

levy the fees on China-linked ships to loosen the country's grip

on the global maritime industry and bolster U.S. shipbuilding.

An investigation during the former Biden administration

concluded that China uses unfair policies and practices to

dominate the global maritime, logistics and shipbuilding

sectors, clearing the way for those penalties.

China hit back last week, saying it would impose its own port

fees on U.S.-linked vessels from the same day the U.S. fees took

effect.

"We are in the hectic stage of the disruption where everyone is

quietly trying to improvise workarounds, with varying degrees of

success," said independent dry bulk shipping analyst Ed

Finley-Richardson. He said he has heard reports of U.S.

shipowners with non-Chinese vessels trying to sell their cargoes

to other countries while en route so the vessels can divert.

Reuters was not immediately able to confirm.

Analysts expect China-owned container carrier COSCO

to be most affected by the U.S. fees, shouldering nearly half of

that segment's expected $3.2 billion cost from those fees in

2026.

Major container lines, including Maersk,

Hapag-Lloyd ( HLAGF ) and CMA CGM, slashed their exposure by

switching China-linked ships out of their U.S. shipping lanes.

Trade officials there reduced fees from initially proposed

levels and exempted a broad swath of vessels after heavy

pushback from the agriculture, energy and U.S. shipping

industries.

USTR did not immediately respond to a request for comment.

China's commerce ministry on Tuesday said, "If the U.S.

chooses confrontation, China will see it through to the end; if

it chooses dialogue, China's door remains open."

In a related move, Beijing also imposed sanctions on Tuesday

against five U.S.-linked subsidiaries of South Korean

shipbuilder Hanwha Ocean which it said had "assisted and

supported" a U.S. probe into Chinese trade practices.

Hanwha, one of the world's largest shipbuilders, owns Philly

Shipyard in the U.S. and has won contracts to repair and

overhaul U.S. Navy ships. Its entities also will build a

U.S.-flagged LNG carrier.

Hanwha said it is aware of the announcement and is closely

monitoring the potential business impact, and that it will

continue to provide services to its customers, "including

through our investments in the U.S. maritime industry and via

Hanwha Philly Shipyard."

Hanwha Ocean's shares sank nearly 6%.

China also launched an investigation into how the U.S. probe

affected its shipping and shipbuilding industries.

SHIPPING LINES SCRAMBLE FOR WORKAROUNDS

A Shanghai-based trade consultant said the new fees may not

cause significant upheaval.

"What are we going to do? Stop shipping? Trade is already

pretty disrupted with the U.S., but companies are finding a

way," said the consultant, who requested anonymity because he

was not authorised to speak with the media.

The U.S. announced last Friday a carve-out for long-term

charterers of China-operated vessels carrying U.S. ethane and

LPG, deferring the port fees for them through December 10.

Meanwhile, ship-tracking company Vortexa identified 45

LPG-carrying VLGCs - 11% of the total fleet - that would be

subject to China's port fee.

Clarksons Research said in a report that China's new port

fees could affect oil tankers accounting for 15% of global

capacity. Jefferies analyst Omar Nokta estimated that 13% of

crude tankers and 11% of container ships in the global fleet

would be affected.

TRADE WAR EXPANDS TO ENVIRONMENTAL POLICY

In a reprisal against China curbing exports of critical

minerals, Trump on Friday threatened to slap additional 100%

tariffs on goods from China and put new export controls on "any

and all critical software" by November 1.

Administration officials hours later warned that countries

voting in favor of a plan by the U.N. International Maritime

Organization 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.

Shares in Shanghai-listed COSCO rose more than 2% in early

trading on Tuesday. The company said its board had approved a

plan to buy back up to 1.5 billion yuan ($210.3 million) worth

of its shares within the next three months to maintain corporate

value and safeguard shareholder interests.

The shipping firm did not immediately respond to Reuters'

queries about the port fees.

($1 = 7.1337 Chinese yuan)