Caribbean business leaders discuss economic threats from proposed US sanctions against China

More than 450 business leaders and executives across the Caribbean region urgently gathered ‘on-line’ on Tuesday (March 18, 2025) for urgent discussions on economic threats to Caribbean nations likely from crippling restrictive measures currently being contemplated by the United States government.

Specifically, the proposed measures will increase the cost of commercial shipping, inclusive of imports and exports to Caribbean countries, by 50% to 60% with disastrous economic and social consequences for the entire region.

The virtual meeting on March 18, hosted by the CARICOM Private Sector Organization (CPSO) gave Caribbean business entities an opportunity to discuss the implications, consequences and threats posed by the proposed measures. Caribbean concerns will be presented at a public hearing hosted by the Office of the United States Trade Representative (USTR) in the main hearing room at the International Trade Commission in Washington DC on Monday May 24, 2025. That date is also the deadline for submission of comments.  April 1, 2025 is the date set for rebuttal.

On February 21, 2025, the USTR invited public comment on “Proposed Actions in Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance. USTR stated then that it “found China’s acts, policies, and practices to be unreasonable and to burden or restrict US commerce.”  It indicated then its intention to proposed fees and restrictions on Chinese shipping.

“To obtain the elimination of China’s acts, policies, and practices, and in light of China’s market power over global supply, pricing, and access in the maritime, logistics, and shipbuilding sectors, USTR proposes to impose certain fees and restrictions on international maritime transport services related to Chinese ship operators and Chinese-built ships, as well as to promote the transport of U.S. goods on U.S. vessels.”

In this regard any Chinese-built vessel entering US ports would be assessed a fee of up to $1.5 million per entry. This tariff would have a severe, far-reaching financial impact on exporters to the Caribbean as many vessels serving the region were built in China. Shipping lines would therefore be forced to increase freight rates.

 

Tropical Shipping is an American owned vessel owner/ operator and logistics provider has been serving Caribbean nations for more than 60 years. Tropical operates a fleet of 19 vessels. Nearly half the fleet (9 ships) are Chinese built, designed specifically for serving Caribbean ports. At this time (and for the foreseeable future) there is limited availability of US built ships that are suitable for serving the various ports across the Caribbean. The actions now contemplated by the USTR would clearly undermine regional development by disrupting commerce and Caribbean export trade, creating chaos and disarray across the entire Caribbean region.

Background

The USTR was responding to a petition filed on March 12, 2024 by five labour unions requesting an investigation into what was described as the “… acts, policies, and practices of China targeting the maritime, logistics, and shipbuilding sectors for dominance.” The unions petitioning action under the USA Trade Act include:

  • United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO CLC (“USW”);
  • International Association of Machinists and Aerospace Workers (“IAM”);
  • International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO/CLC (“IBB”);
  • International Brotherhood of Electrical Workers (“IBEW”); and
  • Maritime Trades Department, AFL-CIO (“MTD”).

The USTR decided to investigate the issues as presented by the five unions, ultimately deciding that “China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is actionable under Sections 301(b) and 304(a) of the Trade Act.”

Participants Comments

 Caribbean responses to proposed sanctions to shipping by USA …

As the CARICOM Private Sector Organization’s virtual meeting progressed, with speaker after speaker addressing the implications and threats inherent in the reactions contemplated by the US government, written comments and opinions from participants scrolled continuously.

Below is a sampling of written comments posted by participants on-line during the special CPSO meeting on Tuesday March 18

  • ‘No new builds’ will undermine the initiatives of the IMO. We in the Caribbean are most impacted by climate change. The vessels made in the USA under the current administration will not be looking at clean energy sources but rather oil-based energy sources that will continue to add to climate change.
  • Do not support nor rally around the “no new build”. This is binding companies which we do not control to a situation where the USA cannot meet the supply of ships needed.
  • Carve out Caribbean companies in general. Not just Caribbean shipping lanes.
  • It would be a mistake for us to promote a cap on ship builds. More ships in our region could be to our advantage.
  • We have no right to get into the local debate by the USA unions. Our focus should be on keeping trade to and from the Caribbean in place. We must recognize that this is a Donald Trump trade missive against China and I would be surprised if he is mindful of the fallout that affects us here in the Caribbean.
  • I agree that the issue is China and there might be very little we can do from the position of lobby. It may have started as a domestic matter but it has thrown us a curve ball. We should be examining how to get around the challenges. It was stated that Jamaica has an advantage of attracting a number of lines. Could we explore other lines to the Caribbean that avoid USA?
  • What percentage of vessels that call at our regional ports are Chinese built? Do we have that data?
  • A majority of the lines that service the region have Chinese-built vessels, hence the concern and the note of the suggestive remedy Nugent Hill proposed of exemption per ships built. Prior to introduction of this law.
  • Jamaica offers transshipment for lines that do not have Chinese built vessels. And it does afford a re- routing option. However, many of our suppliers are out of the USA, or shipments are consolidated in the USA from X USA markets then shipped to us in the Caribbean, especially the ECS territories who receive lower volumes.
  • Would Chinese-made vessels owned by a German company carrying US grain be subjected to these penalties?
  • In an article out of India, it was noted that Asia … China, South Korea and Japan … has 90% of the world’s order book in terms of vessel manufacturing.
  • How about requesting:(1) grandfather in currently owned ships;(2) any ship that is not currently built by US be exempt from the policy; (3) clarification as to whether the ships can be built by majority US own companies.
  • It should also be noted that CMA-CGM is partnering with the USA.
  • Do not suggest nor rally around the ‘no new build’. This is binding companies which we do not control to a situation where the USA cannot meet the supply of ships needed.
  • ‘No new builds’ will undermine the initiatives of the IMO. We in the Caribbean are most impacted by climate change. The vessels made in the USA under the current administration will not be looking at clean energy sources but rather oil-based energy sources that will continue to add to climate change.
  • A leadership mindset of understanding the nuances of the Caribbean region needs to be articulated. This should be a discussion beyond data and statistics.
  • One of the objectives that the US is seeking to achieve is to be the dominant economy in the world. And we are being asked to try it. With whom do we side? The USSR? China? I think that is the ultimate question.
  • Majority of the (shipping) lines that service the region have Chinese-built vessels hence the concern and the suggested remedy proposed of exemption of ships built prior to introduction of this law.
  • Jamaica offers transshipment for lines that do not have Chinese built vessels and it does afford a re-routing option. However, many of our suppliers are out of the USA or (otherwise) shipments are consolidated in the USA from ex-USA markets, then shipped to us in the Caribbean especially territories in the Organization of Eastern Caribbean States who receive lower volumes. []

♦ FIRST PUBLISHED: March 24, 2025

FIGURES FROM THE CARICOM SINGLE MARKET AND ECONOMY (CSME) SHOW DISPARITY IN CARIBBEAN TRADE BETWEEN THE USA AND CHINA