U.S. energy exporters want the Trump administration to exclude liquefied natural gas, oil, and refined products from a new rule requiring a rising percentage of exports to sail on U.S.-built and operated vessels, starting at 1% in 2028 and rising to 15% by 2047. The energy exporters fear the plan threatens U.S. export competitiveness due to the nation’s limited shipbuilding capacity and could risk gains Trump achieved by removing Biden’s ban on LNG permits. The United States is the world’s number one LNG exporter, bringing in $34 billion annually.
On April 17, the U.S. Trade Representative (USTR) announced that LNG producers would have to transport 1% of their exports on U.S.-built ships starting in April 2029, based on total exports of the prior calendar year, climbing to 2% in April 2031, and escalating every two years to reach 15% in April 2047 and beyond. USTR proposed the rules as part of a larger effort to counter China’s growing commercial and military dominance in global waters by expanding the U.S. maritime fleet. Exporters that do not comply could lose their export licenses, even though the percentages apply to the overall industry and to ships that exporters do not own or control.
There are 792 LNG carriers in operation globally, with South Korea and Japan dominating that group with 703 vessels combined. China, which plans to become a major hauler of LNG, has built 58. There are five from U.S. shipyards, but they are 1970s-era American-made vessels that are not currently in use. South Korea remains the dominant builder with 232 LNG carriers currently on order. China, however, is rapidly expanding its fleet with 101 LNG carriers on order. Chinese-built ships make up about 7% of the global LNG tanker fleet currently in operation, but Chinese shipbuilding yards have been expanding their market share, accounting for around 28% of LNG tankers on order.
The industry does not believe that U.S. shipyards can turn out vessels fast enough to meet the USTR deadline, because building them will likely take decades. The USTR requirement for 1% of LNG exports to be transported on U.S.-built vessels would require five American-built ships by the end of the decade, which is not believed to be feasible, because it would take five years to build one LNG carrier at either of the two U.S. shipyards with docks long enough to build a ship of the required scale. LNG exporters are also dubious because building LNG tankers in the United States is a more costly endeavor compared to building them in overseas shipyards, and U.S. shipyards do not have the relevant experience.
LNG exporters were allowed some concessions. A shipowner can get an extension, for example, if they can show that they have an LNG ship being built in the United States once the requirements go into effect and that the owner can take delivery within three years.
Fees on Chinese Ships
In April, the United States announced fees on vessel owners and operators of China based on net tonnage per U.S. voyage. The previous proposal was a per-port-entry fee of up to $1.5 million on Chinese-built vessels, and up to a $1 million per-port-entry fee on any vessel (Chinese-built or non-Chinese-built) for operators that have any Chinese-built vessels in their fleet or orderbook. The new USTR proposal on operators of Chinese-built ships is based on net tonnage or containers, and continues to increase incrementally over time. An oil supertanker made in China and operated by a Chinese company could face a fee of up to $5.2 million per call at a U.S. port because of the large tonnage of the supertankers compared to smaller oil tankers. The previous per-call only fee would have charged up to $3.5 million for a tanker to call at a U.S. port.
An article from “The Maritime Executive” outlines the types of fees vessels and operators would face:
The fees for Chinese-built vessels would be charged up to five times per year, per vessel. The first fee effective October 14, 2025, would be $50 per net ton and would increase six months later to $80. Annual increases would move to $110 and $140 per net ton in 2028.
For vessel operators of Chinese-built vessels, the fee starts at $18 per net ton in October 2025, rising six months later to $23 per net ton. The annual step-ups would be to $28 in 2027 and $33 per net ton in 2028.
The alternative for vessel operators is based on per container discharged, starting at $120 for each container in October 2025, then increasing to $153 per container in 2026, $195 in 2027, and $250 per container in 2028. The fee can be suspended for up to three years if the owner orders and takes delivery of a U.S.-built vessel of equal or greater net tonnage. Other exemptions include empty bulk carriers and ships serving the Great Lakes, the Caribbean, and U.S. territories.
Vehicle carriers face one of the harshest penalties, which targets all foreign-built vessels in the sector. Starting in October 2025, the fee is set at $150 per car arriving on the vessels. There is a possible exemption for operators who order U.S.-built vehicle carriers.
Oil traders have already started to avoid hiring tankers built in China amid concerns that port fees could be coming for Chinese vessels at U.S. ports. The proposal opens a comment period on May 19, and fees will begin 180 days after the rule is finalized.
Definition of U.S. vessel
The USTR proposal contains a much stricter definition of what constitutes a U.S.-built ship versus the current Jones Act definitions used by the U.S. Coast Guard, which permits foreign-made elements and components. The language in the USTR schedule requires all major components of the hull or superstructure of the vessel to be manufactured — which includes every stage of the process — in the United States. It also specifies that key components of the vessel must be built in the United States.
Conclusion
The USTR proposed rules require a whole new shipbuilding sector in the United States to develop essentially overnight. China currently controls nearly a fifth of the world’s commercial shipping fleet, which allows it to influence the pricing and availability of ships used to conduct international trade. Compared to the United States, which only accounts for 0.1 percent of global shipbuilding, China produces 53 percent more ships than the rest. Chinese officials have criticized the U.S. effort, saying the United States blamed China for its long-term shipbuilding decline instead of investing in its shipbuilding industry.
Shipbuilding is a heavy industry, which, like so many others in the United States, was offshored as the decade of the 70’s brought new environmental laws that raised costs and made foreign venues more attractive. President Trump believes that an abundance of energy, lower taxes, and a friendly regulatory environment will enable the reestablishment of some of these industries on domestic shores using new technologies and processes. President Trump is moving aggressively to confront the shrinking U.S. maritime fleet and shipbuilding capabilities and the problems they pose to the nation’s economy and security. Whether these and other proposed measures will make a difference remains to be seen.
