As mentioned in our recent posting, we continue to be approached by clients in connection with the charges proposed by the USTR notwithstanding that these charges have been on the table for many months and ample notice was given of the 14 October 2025 commencement date.
It seems that many clients were hoping that the US would back down but that has not been the case so far. Clients are now scrambling to deal with issues relating to US trade. There is recommended BIMCO clause in circulation. However, that clause does not extend to existing charters. We continue to be approached for advice on who should bear these charges and if and how they can be passed down to others.
To add to the mix, China has retaliated against the USTR charges by implementing its own port charges on vessels owned or operated by US firms and individuals, US built ships (albeit there are not many of those) and US flagged vessels. It seems that the charges are in the region of US$56 per net ton with plans to increase this over time. There is an obligation on the ship to disclose relevant information (country of build, flag, ownership details, intended ports of call) at least 7 days before arrival at a PRC port but it is not clear who must provide this information i.e. ship owner, operator or manager. It is also unclear what happens if the charge is not paid. The indication is that the ship may be denied port entry or clearance but it remains to be seen whether the vessel could be detained or arrested.
Again, the same legal issues apply as to who bears the costs of these charges in existing charters. The likelihood is that the charges (being port costs) will fall on charterers who will no doubt seek to find ways to pass them on to shippers. However, concerns remain that this is really a tax on the vessel and not an operational charge which may have a bearing on where the responsibility for payment lies.
A more recent escalation is the PRC’s sanctioning of the US subsidiaries of Korean shipbuilder Hanwha. It is not clear yet what affect this might have on PRC entities who may have vessels contracted at Hanwha. Whilst the sanctions might deter new contracts, it is unclear how this affects existing contracts and whether it may give rise to force majeure claims from those who find it impossible to honour their obligations. As matters stand, it seems that the sanctions only apply to those contracting with Hanwha’s US subsidiaries but it is not clear if they extend to contracts where parts of the building process is done in the US and part in Korea.
We are constantly approached for advice on tariffs and sanctions and how these affect existing English law contracts. If you have an issue arising from such matters then please get in touch with us.
Nick Burgess
Partner
