After imposing 20 per cent tariffs on Chinese goods, US may take THIS step to punish China; What will India do?

US President Donald Trump has decided to give yet another blow to China. After imposing a 20% tariff on Chinese goods, that will come into effect on April 2, Washington may soon crack another whip on Beijing by imposing stiff penalties on ships built in that country.

USTR Report On Chinese Shipbuilding

Trump will swing into action to punish the Xi-Jinping-led communist country after the United States Trade Representative (USTR) reported that China was involved in the illegal practice of forced technology transfer and theft of intellectual property, besides suppressing labour wages and supporting the manufacturers with incentives. 

As most of the ships are built in China which has the world’s biggest ship-building capacity, if the US decides to impose penalties on the ships of Chinese origin, they will become ineligible to call at US ports. 

China Dominates Shipbuilding Industry

China builds more than half of all container ships. Its share in shipbuilding soared from less than 5% in 1999 to over 50% in 2023. Washington it holding talks with South Korea and Japan to augment its shipbuilding capacity. 

USTR has said in its report that China's ownership of the world’s commercial shipping fleet increased to more than 19% in January 2024. 

With Beijing controlling the production of 95% of shipping containers and 86% of the global supply of intermodal chassis, Washington wants to stop it somehow. 

Donald Trump May Impose These Penalties On China-Made Ships

If President Donald Trump accepts the recommendations made by the USTR, he will impose fees of up to $ 1 million per port call in the US for ships operated by Chinese carriers. It can go up to $1.5 million for every call of port for operators of Chinese- built ships and compulsory US flag requirement. 

He can also choose to impose tiered fees calculated on the basis of what the percentage of Chinese- built ships is.

The US may also crack whip on dry bulk cargo ships because Washington is critical for coal and grain shipments. 

What Can India Do?

The USTR recommendations have come at a time when Indian Finance Minister Nirmala Sitharaman announced many proposals to boost the maritime sector in India, including shipbuilding. While presenting the Union Budget 2025, she announced to set up Maritime Development Fund (MDF) to support India’s Maritime sector by providing financial assistance.

She also announced an initial corpus of Rs 25,000 crores, with a 49% share of the Union government. Major port authorities and state governments may contribute the remaining amount.