As many in the shipping industry are well aware, and as we have previously noted, the Office of the United States Trade Representative (the “USTR”) issued a Notice of Action on April 17, 2025 implementing service fees on Chinese vessel operators and owners, as well as operators of Chinese-built vessels, and for car carriers and roll-on/roll-off vessels. 

Those fees (contained in Annex I, Annex II and Annex III of the notice) remain scheduled for October 14, 2025.

Until very recently, there has been minimal guidance from the US government around implementation, creating commercial and compliance uncertainty for vessels trading to the United States.  As a reminder, the fees to be imposed on October 14 for vessels trading to the US broadly cover the following:

• Annex I: A fee in the amount of $50 per net ton for an arriving vessel “owned or operated by a Chinese entity”;
• Annex II: The higher of a fee in the amount of $18 per net ton, or $120 for each container discharged, from an arriving Chinese-built vessel (subject to a number of exemptions);
• Annex III: A fee in the amount of $14 per net ton for an arriving vessel classified as a vehicle carrier or roll-on/roll-off vessel.

Now, following several months of silence, a new guidance document was released on October 3 by U.S. Customs and Border Protection (“CBP”), which serves as the agency in charge of implementation of USTR’s service fees, through CBP’s Cargo Systems Messaging Service; and limited guidance has also emerged yesterday from Area Port Houston/Galveston, both as detailed below.

The October 3 CBP Guidance

In the government’s October 3 message, CBP provides certain operational updates related to implementation of the fees, but disclaims any responsibility for providing interpretive guidance as to the contours of USTR’s April action.  Instead, CBP explicitly advises that “The burden for determining if a vessel owes the fee is on the operator, NOT CBP.” (emphasis in original).

The guidance document contained with CBP’s message includes important operational details about the imposition of vessel fees.  Specifically:

• LNG Tankers Are Exempt from Annex I-Annex III Fees: Liquified Natural Gas (LNG) tankers, designated as vessel type 132 by the International Classification of Ships by Type (ICST) are exempt from fees in Annexes I, II, III.
  • This is because the April 17 notice contains a separate regime for those kinds of vessels, in Annex IV of that notice; and the regulations provide that the service fees are not cumulative, and that a vessel can only be subject to one of the fees contained in either Annex I, Annex II, Annex III or Annex IV. 
  • It has been rumored that USTR plans to modify aspects of the Annex III and Annex IV fees, concerning car carriers and LNG tankers, after announcing a public comment period concerning modifications in June. Those proposed modifications have not been finalized.
• Payment of Annex I – Annex III Fees Are Due on or Before Arrival: If a vessel is subject to one of the fees in Annex I, II or III, that fee is to be paid “on or before the entry of the vessel at the first U.S. port or place” from outside the U.S. while on a particular voyage.
  • CBP has stated that “[r]esponsible parties are strongly encouraged to pay fees prior to vessel arrival as vessels without proof of payment will be subject to denial of lading or unlading operations, or granting of clearance withheld, until proof of payment can be verified.”
  • CBP recommends that any payments should be initiated at least three (3) business days in advance of vessel arrival. For a vessel arriving on October 14, 2025, any applicable fees should be paid no later than Thursday, October 9.
  • Payments of fees must be made directly through the U.S. Treasury’s Pay.gov website and not at the Port of Entry. Pay.gov will calculate fees based on selections made on the Section 301 Fee Payment Form. Pay.gov will then pass the payment confirmation to the electronic Vessel Entrance and Clearance System (“VECS.”).
  • If VECS cannot match the payment to an arriving vessel, the entrance and clearance filer or vessel operator can provide proof of payment utilizing the payment confirmation email from Pay.gov.

Port Houston’s October 6 Trade Information Notice

In an important trade information notice issued yesterday afternoon, Area Port Houston/Galveston (“Port Houston”) has issued additional guidance on the implementation of the USTR fees, including with respect to the distinctions contained in Annex I and Annex II and the information CBP will look to regarding a vessel owner and operator of China. This follows on from a nearly identical notice issued by the Port of New Orleans on October 3.

Specifically, Port Houston’s breakdown includes the following details:

Annex I (Chinese Vessel Operators and Owners)

Port Houston states that the “vessel owner(s) will be determined by the vessel’s registry” and that the “[v]essel operator will be verified through review of the Certificate of Financial Responsibility (“COFR”).”  

With respect to the vessel operator, ports “may also request other verifiable agreements like a Bridge Letter or Continuous Synopsis. . .” 

The initial fee of $50 (which increases incrementally over the next five years) is based on the vessel’s net tonnage, and that figure will be determined by the vessel’s International Tonnage Certificate (“ITC”).

There are no exemptions or suspensions available from Annex I fees for vessels that fall within its scope.

Annex II (Chinese-Built Vessels)

Port Houston states that these fees apply to those vessels built in the People’s Republic of China, which are not subject to Annex I fees, and not otherwise exempt.  The vessel’s build information is determined by the vessel’s registry.

The initial fee is set at the higher of $18 per net ton (again using the vessel’s ITC) or $120 per container discharged.  Only the higher of the two fees is collected and the fees will again increase incrementally over the next three years.  The measure as to the number of containers discharged will be determined by figures transmitted on applicable electronic cargo declarations (e.g., bills of lading).

As noted in the USTR’s original notice, there are several exemptions available, including for “U.S. government cargo, U.S.-owned or U.S.-flagged vessels enrolled in certain maritime programs, vessels arriving empty or in ballast, and vessels below specific capacity thresholds (4,000 TEUs, 55,000 DWT, or 80,000 bulk capacity).”   There is also a potential suspension of the Annex II fees available if certain conditions are met, such as ordering a U.S.-built vessel, as provided in the Annex.

Annex III (Foreign Vehicle Carriers)

Port Houston states that the Annex III fees apply “to all foreign-built vehicle carriers (type 325) or roll-on/roll-off (Ro-Ro, type 333) vessels.”  This fee is again based on the “net tonnage of the entering non-U.S. built vessel.” 

This detail is very notable because this guidance appears to anticipate that the USTR will implement modifications that it had proposed in June 2025; but USTR has not published any notice implementing those modifications.  See USTR June Notice at 5 (proposing to modify the basis of the car carrier fee from Car Equivalent Units to net tonnage).

Annex III also does not have any exceptions but does allow for the suspension of the fee if certain conditions are met, such as ordering a U.S.-built vessel.

For further information or questions, please contact a member of the Seward & Kissel team.