“Strengthening America’s shipbuilding sector is a goal the dairy industry shares. IDFA members have seen firsthand the value of U.S.-owned and -flagged vessels when supply chains are tested,” said Becky Rasdall Vargas, senior vice president of trade and workforce policy at IDFA. “USTR’s proposed actions, however, risk inflicting serious unintended consequences on American exporters, producers, and workers by raising shipping costs, rerouting global trade, and weakening supply chains—especially for time-sensitive, perishable products like dairy.”

USTR’s proposal, “Proposed Action in Section 301 Investigation of China's Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance,” includes steep port entry fees—ranging up to $1 million per port entry—on maritime transport operators linked to Chinese-built or Chinese-ordered vessels, including carriers who have pending orders for Chinese-built vessels. IDFA and a group of more than 30 organizations representing a wide range of the ocean-going shipping supply chain today released an economic impact report projecting USTR’s proposal would lead to a greater than 8% decrease in U.S. dairy exports, a nearly 14% decrease in dairy imports, and a net negative impact on imported inputs for the dairy industry.

 In its formal comments to USTR, IDFA noted several additional concerns:

• Penalties vs. Support: USTR proposes penalties to “create leverage,” yet provides no support to a U.S. shipbuilding industry facing a shortage of workers, the diversion of resources from commercial shipbuilding to naval shipbuilding, and a shortage of additional resources needed to overcome these challenges.
• Loss of U.S. Port Business: IDFA members have already received warnings from shippers and forwarders indicating that USTR’s proposed actions will shift U.S. port business to other parts of the world.
• Skyrocketing Costs: Container vessels servicing the U.S. typically call at 3-4 U.S. ports on each trip. Per port call fees of $1-3.5M would add millions in costs to each voyage, which would dramatically increase freight rates, especially on routes where U.S.-built ships are unavailable.
• COVID-Like Supply Shocks: Members fear the proposal could recreate COVID-era disruptions—shelved inventory, sudden price swings, and supply shocks—without a clear plan to support the U.S. shipbuilding industry’s capacity needs.
• Implementation Confusion: The proposal lacks critical clarity around who would be responsible for tracking and paying the fees, creating an unpredictable and burdensome environment for small and medium-sized businesses.

“The layers of uncertainty facing IDFA exporters and importers alike are only increasing through this proposal,” said Vargas. “IDFA stands ready to work with USTR and other federal partners to ensure any future actions reflect the needs of the U.S. dairy supply chain, while still achieving the administration’s strategic objective of boosting our domestic shipbuilding capacity.”