We first reported on this back in April. As with all things from the US these days, it is hard to say with certainty that it will definitely happen but, as at the time of writing, it is scheduled to come in on 14 October 2025. The mere existence of this proposed new tax is already having an impact. According to recent reports, the PRC yards’ share of newbuilding orders in the first half of 2025 has dropped from 72% to 52%. This may also have something to do with a drop in global activity amidst concerns over the economy but, against that, we have seen more clients opting for Korean yards and more appetite for alternatives in Turkey and Vietnam. Clients also remain interested in the high quality offered by Japanese yards, particularly for more advanced vessels, although Japanese yards are generally full and prices remain high.
We have also seen a trend away from Chinese leasing structures – presumably also motivated by tariff issues and the USTR. Clients are now looking at alternative financing structures including a lot of post contractual finance. Japanese leasing structures remain popular and may get a boost from the USTR issues.
We continue to help clients negotiate contracts with yards and in relation to associated finance. Although most yards contract on the basis of the SAJ Form (which derives from Japan), the market norm is that such contracts and related finance are governed by English law. Many ships are also structured under leasing arrangements with special purpose vehicles and charter structures in place which are also based on English law.
Nick Burgess
Partner
