On 24 and 26 March 2025, the Section 301 Committee (the “Committee”) held public hearings on the Proposed Actions at the International Trade Commission in Washington. We recently published a newsletter outlining these Proposed Actions (here: link).
The purpose of these hearings was to gather testimony from industry stakeholders before final recommendations on the Proposed Actions are made to the USTR.
A large number of stakeholders from the U.S. private sector and stakeholders from outside the U.S. testified before the USTR and the Committee during the public hearings. Even more stakeholders had prior to the hearing submitted written statements to the USTR (see here: link).
Representatives of the USTR, U.S. Congress members, and representatives from several U.S. departments and authorities participated in the public hearings.
On 26 March 2025, the second day of the hearing, panel discussions were held, where panellists got the opportunity to present their views and concerns about the Proposed Actions. After each panel, the U.S. representatives and members of the Committee had the opportunity to ask questions to the panellists, which illustrated that additional perspectives on and alternatives to the Proposed Actions may now be introduced as part of the dialogue.
A variety of views were presented during the hearing, but some issues or topics were repeated by several panellists. In this newsletter, we will highlight three points presented by panellists as arguments for why the Proposed Actions will not fulfil the intention of promoting U.S. shipbuilding as well as some alternative proposals that would better aid the U.S. shipbuilding situation:
1) Need for increased U.S. shipbuilding capacity instead of the Proposed Actions: A representative from a Canadian shipowners’ association pointed to the fact that the lack of domestically built vessels within the U.S. has been caused by the lack of capacity within the U.S. shipbuilding sector and highlighted the need for further focus on recommencing U.S. shipbuilding before imposing any fees on the shipping industry.
This was exemplified by a representative from Dole, the largest supplier of bananas in the U.S. He outlined at the hearing that bananas are one of the most important parts of U.S. food security and are purchased more often by American consumers than milk, eggs and bread. Due to the short life cycle of a banana, they need to be refrigerated and thus it is essential that bananas are transported quickly and correctly, which requires specialised vessels. The representative from Dole explained that their newest vessels are built in China because no other shipbuilders, including the U.S. shipbuilders, would take on the task of providing the specialised vessels.
The representative from Dole further highlighted that, in addition to the lack of capacity within U.S. shipyards, the issues that the Proposed Actions attempt to address will not be resolved by the Proposed Actions, but instead they will adversely affect the American consumer as well as small enterprises and ports.
Representatives from the U.S. authorities asked clarifying questions to the panellists on ways to increase capacity for shipbuilding within the U.S. Several of the panellists echoed and highlighted the need for further cooperation with other ship-building sectors, including cross-enterprise arrangements as a more effective measure than imposing fees.
2) Enhance collaboration: The concern on the lack of capacity in the U.S. shipbuilding sector is closely linked to another point of view presented by many panellists at the hearing and during the following rounds of questions from the representatives from the U.S. authorities, namely, the need for enhanced collaboration.
It was clear from the testimonies that there will also be an increasing need for further collaboration with international partners outside of the U.S., including countries with already established shipbuilding sectors, such as Japan, South Korea, and countries in the European Union, as e.g. stated by a representative from the Consumer Technology Association.
By collaborating more globally, this will increase shipbuilding capacity in the U.S. and the ability to compete effectively with the Chinese shipbuilding industry without the impact of Proposed Actions on the international shipping community and the U.S. economy.
The representative from the Canadian shipowners’ association echoed this view when asked follow-up questions by the representatives from the U.S. authorities and also outlined how their members often experience getting turned away from North American shipyards.
Following the conclusion of the panels, the representatives from the U.S. authorities asked clarifying questions to the points raised by the panellists during their testimonies. The representative from the Consumer Technology Association elaborated on these points by reminding everyone of how the tradition of collaboration between the U.S. and their allies is strong, and referred to “very strong, robust, and historic allies that do have tremendous capacity for shipbuilding”, and also recalled the fact that most cruise ships are built in Europe.
3) The costs will end with the American end consumer: A third issue that was highlighted by many panellists was the risk of the costs ending with the American end consumer. It became clear during testimonies that the Proposed Actions pose a significant and real risk that the actual costs of the Proposed Actions will ultimately end up with the American consumer.
This was also highlighted by Dole in the presentation on the effect of the import of bananas. As an additional example, a representative for the National Retail Federation declared the maritime industry as “a critical component” in the retailers’ supply chain. Thus, the port fees in the Proposed Actions as well as the costs of the potential rerouting of vessels to avoid fees will be passed on to the retailers who will have no other choice than to pass them on to their customers – the American consumer.
Following the conclusion of the panels, the representatives from the U.S. authorities wanted to know more regarding the potential economic effect for the end consumer and asked many questions regarding the potential increased costs that would be channelled to the end consumer.
The representative from the National Retail Federation added that it is unavoidable that the Proposed Actions will accumulate additional costs, which will be passed down the supply chain all the way down to the end consumer, and among other things recalled the unfortunate costs relating to the pandemic and the increased container rates. In addition, he also highlighted that for smaller businesses, who cannot pass on the extra costs, there is a significant risk that such businesses will be forced to close if the Proposed Actions are adopted.
A representative from a not-for-profit shippers’ association supported this position by adding that the costs put on the shipper by the Proposed Actions will be passed on to the end customer as the shipper will as a minimum try and recover the costs by including a surcharge to the general freight.
Although the hearings did not definitively confirm whether or not the USTR will introduce new port fees and restrictions on transport on goods to the U.S., there is an argument to be made that the outcome of the hearing should be seen as positive.
The transcript from the hearings – particularly from 26 March 2025 – illustrates that the focus was not only on how to “punish” all stakeholders with ties to China, but also to discuss and consider new perspectives, including (i) the need to create sufficient capacity for shipbuilding outside of Asia, (ii) the opportunity for closer collaboration between the U.S., Canada and the European Union and (iii) the potential risk that the end consumer will ultimately be the one to pay for the port fees introduced as part of the Proposed Actions.
Following the conclusion of the hearing, the panellists and speakers were invited to submit their points of view in post hearing briefs prior to the USTR making their decision on the final proposal for potential trade actions.
There seems to have been a valuable dialogue between the lawmakers and the affected stakeholders, and one could hope that some of this will feed into the actual actions.
However, as we concluded in our previous newsletter (here: link), it is still uncertain if and when the USTR will make a decision to adopt the trade actions or if the U.S. will introduce new or additional actions against stakeholders with ties to China. The sole discretion will in the end rest with the U.S. President.