USTR Fee Proposal Risks Hiking Farm Export Costs

New Fees on Chinese-linked Carriers Could Impact U.S. Agriculture

The U.S. Trade Representative (USTR) has proposed implementing new fees on ocean carriers associated with China, which could significantly affect U.S. agricultural exports by increasing transportation costs.

These fees, aimed at Chinese-operated and Chinese-built vessels, could be as high as $1.5 million per port call, a move to diminish China’s stronghold in global logistics.

The American Farm Bureau Federation (AFBF) has analyzed the impact, estimating that agricultural exporters could incur an additional $372 million to $930 million annually.

"Depending on [the fees applied]... bulk agricultural exporters could face an additional $372 million to $930 million in annual transportation costs," notes the Market Intel report, highlighting potential losses ranging from 9.5 to 27.8 cents per bushel of soybeans—a critical hit in a market sensitive to slight price shifts.

Echoing the sentiment of concern, AFBF President Zippy Duvall commented, "Unfortunately, farmers may feel the brunt of increased costs in exporting their goods. They’ve lost money on almost all major crops for the past three years. Higher freight rates could make things even worse by reducing their competitiveness overseas."

Additionally, the USTR's proposal includes minimum requirements for U.S.-flagged, operated, and built vessels. This initiative faces challenges due to the limited number of U.S. shipyards and longer shipbuilding durations compared to those in Asia.

With the deadline for public comments set for March 24, the agricultural community is encouraged to voice their concerns and suggestions. This feedback is crucial as it could help shape the final decision, potentially averting a significant financial impact on U.S. farmers and the broader agricultural sector.