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US industries oppose $3 million fees on China-linked ships

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US shipping fees on China vessels face industry backlash

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Banana supplier Dole says makes 300 U.S. port calls a year

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China-linked ship fees spark US industry concerns

(Recasts with outcome of meeting, adds comment from energy and

agriculture executives throughout)

By Valerie Volcovici and Lisa Baertlein

WASHINGTON, March 26 (Reuters) - Fossil fuel and

agriculture industry executives criticized the Trump

administration's plan for big fees on China-linked ships

entering U.S. ports during a hearing in Washington on Wednesday,

arguing the move would hobble their ability to export everything

from coal to soybeans.

The proposed fees on China-built vessels could top $3

million per U.S. port call. Few vessels would be exempt, making

U.S. export prices unattractive and foist up to $30 billion of

annual import costs on American consumers.

The Trump administration says the fees by the United States

Trade Representative would curb China's commercial and military

dominance on the high seas and promote a U.S. shipbuilding

renaissance. Opponents say the plan could backfire on farmers,

miners and other groups that would drive orders at domestic

shipyards.

"The suggested policies do not punish China as intended,

but rather punish American industry and will put American

laborers out of work," said Gregory Kravitz, vice president at

Oxbow Energy, a South Texas-based oil and gas company, at the

congressional hearing.

The energy industry is the top U.S. exporter by value and

Trump has pushed an energy dominance agenda. It is at risk from

the fees because, like most others, it relies on fleets that own

or have ordered ships from China.

"There is insufficient supply of suitable vessels for

U.S. producers to charter which would enable them to avoid

paying these fees," Peter Bradley, CEO of coal and oil exporter

Javelin Global Commodities, said in comments prior to this

week's hearings.

The issue, along with the administration's escalating trade

wars with China, Europe, Canada and Mexico, has revealed an

unlikely fault line between U.S. President Donald Trump and

executives from industries he promised to support during his

campaigns for office.

If implemented, the USTR fees could cause U.S. exports to

fall 12%, hitting farmed products, petroleum and coal, said Cary

Davis, CEO of the American Association of Port Authorities, on

Wednesday.

Coal and agriculture officials told Reuters last week

the proposed levies already were making it

difficult to charter ships

for exports and causing some product to pile up stateside.

BYE-BYE BANANAS?

Foes of the port fees likened them to a tax that will

cascade costs throughout global supply chains.

The fees already have sent the bulk shipping costs for

critical exports like wheat, corn and soybeans up 40%, United

Grain Corp said in a letter last week.

MSC

, the world's largest container shipping company, warned it

would likely reduce U.S. port calls to contain costs - a

disruptive move that could spark the return of early

pandemic-era product delays and shortages.

Bananas, the No. 1 consumed U.S. fruit, could get more

expensive or scarce, Jared Gale, chief legal officer of banana

supplier Dole Plc ( DOLE ), testified. Dole makes 300 U.S. port

calls annually and higher port fees would either make bananas

too expensive for consumers or financially unaffordable for the

company to import, Gale said.

The fees would be a double whammy for Perdue

AgriBusiness, hitting both the animal feed it imports and the

chickens it exports, the Maryland-based company said in a letter

to USTR this week.

"We can't tax our way into a competitive ocean

shipbuilding program," said Peter Friedmann, executive director

of the Agriculture Transportation Coalition. He recently alerted

maritime executives that exports of high-value, U.S. perishables

like almonds and fresh beef would be devastated if vessel

owners bypass the small ports they rely on for speedy exports.

The hearing on Wednesday will be the last before the

administration makes a decision on the proposal. During a

hearing on Monday, U.S. ship operators notified USTR that the

fees would hurt their businesses, while representatives of the

domestic steel industry expressed support.