US trade tariffs and proposed port call fees

On 3 April 2025, self-proclaimed Liberation Day, President Trump announced trade tariffs so comprehensive that they apply to uninhabited islands in the Southern Ocean. 

Tariffs are taxes imposed on goods and collected at the time of import into the US. Commonly, international sale of goods contracts will allocate import taxes to the buyer, and export taxes to the seller (this is the case in the well-known FOB, CIF and CFR Incoterms). Therefore, most often it will be US buyers that are responsible for meeting the tariff costs upon import into the US. 

In addition to existing tariffs, President Trump has announced a worldwide baseline tariff of 10 per cent and varying rates applicable to certain countries. A 10 per cent tariff will be paid on goods imported into the US from Australia, which is modest compared with the 145 per cent tariff imposed on goods imported from China, and 20 per cent on goods from the European Union. The 10 per cent baseline tariff, and 145% tariff on goods from China are already in place, while all other countries have been given a 90 day moratorium to negotiate.

This has had an immediate adverse impact on shipping and trade:

• bonded storage is stretched as businesses are shipping and clearing cargo in an attempt to get ahead of tariff implementation;
• freight rates have soared (although not quite to COVID levels) for the same reason;
• some businesses are delaying loading goods on ships while awaiting certainty (which largely was delivered on 3 April 2025), although uncertainty remains for trades relating to those countries considering retaliatory tariffs;
• container trade is set to enter a period of uncertainty and flux with regular trade volumes interrupted that may see changes to established container shipping routes and pricing; and
• such instability is likely to cause congestion and delay.

Read our recommendations below as to how you may protect your business from such instability and uncertainty. 

While tariff announcements are making the headlines, exporters and importers should also be aware of a US Government draft executive order proposing port call fees targeted at vessels with a direct or indirect Chinese nexus. The proposed port call fees aim to counter China's dominance in the maritime, logistics and shipbuilding industries. This impacts a very large proportion of the vessels calling at US ports.

• Chinese owners will be charged a fee of up to US$1 million, or US$1000 per net ton of vessel’s capacity per vessel port call;
• Whatever the nationality of the owner or operator:
  • fleets with Chinese built vessels will be charged a fee of up to US$1.5 million based on the percentage of Chinese built vessels in the fleet; and
  • fleets with vessels on order with Chinese shipyards will be charged up to US$1 million per port call based on the percentage of vessels on order with Chinese shipyards. 

It is proposed that these port fees will be stacked, such that if a vessel calling at a US port falls in all three categories, a fee of up to US$3.5 million could apply.

Conversely, fee remissions are proposed for US owned and built vessels; however, only a small proportion of global tonnage is US owned and built, and therefore the impact of this fee remission will be limited.

Such substantial fees, in some circumstances exceeding the freight itself, are giving cargo interests, charterers, and owners pause for thought when fixing future charters with the following impacts already observed:

• cargo interests, charterers, and owners are re-considering future charters;
• carriers are expected to pass along any US port fees to cargo interests;
• some owners are already insisting that charterparty terms are drafted allocating responsibility for these China levies and potential delay associated to charterers/cargo interests;
• cargoes are being held on the wharf-side, with cargo interests anxious that the port-fees may be implemented once already at sea; and
• increasing demand for Japanese and Korean built ships, in the context that even US ship owners own Chinese-built vessels.

Hearings took place in Washington on 24 and 25 March 2025 with many significant shipping industry participants. The United States Trade Representatives will consider the benefits and impact of implementing the proposed executive order.

In preparation for any decision that may come, and acknowledging that it may come with less warning than the length of a relevant voyage, read our recommendations below. 

Such turbulence is creating a reactive environment for international trade and shipping. To understand how these announcements may affect your business, and get on the front foot, review our recommendations below.

We recommend Australian companies trading cargo with the US:

• review your sale of goods contracts to ensure that the terms clearly allocate:
  • the tariff costs, if you are an Australian exporter to the US, you may wish to consider trading on FCA, FAS, FOB, CFR or CIF Incoterms;
  • the risk of delay, particularly because loss caused by delay is commonly excluded by your cargo insurance policies on Institute Cargo Clauses terms.
• take note that levies on port calls will impact the shipping costs for both US imports and exports so you need to ensure that the liability to pay the levy falls on your counterpart or the carrier.
• ensure your supply chain is prepared to deal with such tariffs at the point of import into the US, including engaging a local customs agent;
• ensure that your insurance cover is appropriate for your trade route and goods, and includes sellers’ contingency insurance to protect you in the case that the buyer refuses to take delivery of the goods (particularly where that involves the buyer paying any additional tariff or port call fee);
• if in a contractual chain, review whether your contracts are back-to-back in respect of tariffs and port call fees, price review, and termination;
• for ongoing trade contracts, review whether you have a price review clause, and whether it will respond to a change in tariffs or port call fees;
• if any demand is made by a contractual counterparty, review the contract to verify whether they are entitled to pass on the tariffs or port call fees; and
• in the face of these additional costs, review whether your contractual counterparts represent an insolvency risk.

It is foreseeable that parties may look to any contractual force majeure clause, or the common doctrine of frustration to escape what might become economically unfavourable or unviable contracts. 

As it stands, case law provides that a financial detrimental change in a contract is insufficient for the contract to become frustrated. Therefore, the tariff and port call fees are unlikely to give either party the right to terminate or avoid performance by reason of frustration (unless there is an express contractual clause otherwise). 

Force majeure is a creature of contract, such that the effect of any force majeure clause is dependent on the wording of the relevant clause. However, force majeure clauses commonly require that the relevant event prevents performance. Again, it is unlikely that a contract becoming financially unfavourable or unviable will qualify as preventing performance, except in the case of a specifically worded force majeure clause.