KANSAS CITY — A series of new levies and restrictions proposed by the Office of the US Trade Representative (USTR) on importers and exporters that use Chinese-made ships could deal a significant blow to US agriculture and transportation, according to an economic impact report commissioned by more than 30 industry groups.

Among the report’s findings: US wheat exports could decline by more than 60% and soybean exports by more than 40% if all the proposed actions were implemented.

The proposed penalties, intended to boost US shipbuilding, include fines of up to $1.5 million for each Chinese-made ship that enters a US port, up to $1 million per port call for Chinese operators and up to $1 million for operators with orders from Chinese shipyards, according to recent reporting by World-Grain. The USTR’s plan also would set minimum amounts that carriers must export on US-built, US-flagged vessels.

Of the roughly 21,000 vessels in the world’s bulk shipping fleet, almost 50% were built in China, and only five ships (0.2%) currently operating in the global fleet were built in the United States.

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“Though well intentioned, this proposal threatens to impose significant costs on US grain and oilseed exporters and erode America’s competitiveness in the international market,” said Mike Seyfert, president and CEO of the National Grain and Feed Association (NGFA), one of the report’s sponsors. “If enacted, this proposal would effectively eliminate half of the global bulk fleet that we need to export almost one-third of grains and oilseeds that are produced in America.”

Paul Farmer, president and CEO of CSC Sugar, LLC noted in a recent letter to the USTR that “60% to 65% of worldwide handy-size tonnage is built in (China).”

“It is not commercially sensible to expect US importers and exporters to operate without ever utilizing a ship that belongs to a fleet that includes (Chinese)-built or flagged vessels,” Farmer wrote.

Of the roughly 21,000 vessels in the world’s bulk shipping fleet, almost 50% were built in China, and only five ships (0.2%) currently operating in the global fleet were built in the United States.

Chinese carriers only account for about 2.1% of total US commercial ship port calls, according to the impact report, while more than four times as many (8.9%) were by ships built in China but operated by US or other non-Chinese carriers.

“While we support efforts to promote US shipbuilding, the proposed penalties would place a disproportionate burden on American farmers, processors and exporters, limiting access to essential shipping capacity and driving up costs ultimately to be shouldered by hard-working American farmers,” said Devin Mogler, president and CEO of the National Oilseed Processors Association.

In recent comments before the USTR, American Soybean Association director Mike Koehne said US soybean farmers “have already seen negative impacts on the futures prices for soybeans because of market reactions to this proposal.”

“Imposing port fees on most of the maritime fleet that exports from and imports to the United States will increase costs for US farmers — both in terms of inputs like fertilizer, seed, etc., and getting crops to market,” Koehne said. “At the same time, our competitors in Brazil and Argentina will not be subject to the same regulations.”

Becky Rasdall Vargas, of the International Dairy Foods Association (IDFA), told the USTR the dairy industry also has felt the proposed regulations’ effects.

“IDFA members have already received communications from shippers and forwarders of their products indicating their expectations that the proposed actions will shift US port business to other parts of the world,” she said. “Some operators appear to already be reserving vessels in certain ports in anticipation of a surge of products to flow to the United States ahead of possible tariff actions, creating the effect of taking capacity out of the market and, in turn, inflating pricing. Many shippers indicate they expect to have to skip ports and reroute ships to avoid fees.”

An additional $1 million fee on vessels carrying agricultural exports could increase costs of most shipments between $15 and $40 per tonne, equal to 50¢ to $1.25 per bu, according to industry estimates.

The economic impact report — “The Economic Effects of Proposed Action in the Section 301 Investigation of China’s Maritime, Logistics and Shipbuilding Policies and Practices” — was conducted by Trade Partnership Worldwide, LLC and sponsored by dozens of trade organizations, including the Agriculture Transportation Coalition, American Association of Port Authorities, American Trucking Associations, Association of American Railroads, IDFA, International Fresh Produce Association, NGFA, National Pork Producers Council and the Fertilizer Institute.

The report showed that wheat exports could decline by 62% if the port fee program is enacted.

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Among the report’s general findings:

• The proposed fees would have a net negative impact on the US economy.

• Farmers and other agricultural producers would be “significantly harmed.”

• US ports, railroads and supply chains would suffer.

• US exporters would lose competitiveness to those in Brazil, Canada, Russia, Australia and other nations.

“US agricultural exports, transportation equipment, chemicals and energy products are among those heavily reliant on ocean shipping services,” the report’s authors wrote. “For agriculture, based on volume, 55% of waterborne trade moves in bulk vessels; 45% in container vessels.”

If all fees and other actions proposed by the USTR were implemented, the report found, total exported goods and services could decline by 7.2%, while imported goods and services could fall by 5%.

The effects could be especially calamitous for US agricultural exports, including:

• A 62.3% decline in US wheat exports

• A 48.5% decline in rice exports

• A 40.4% decline in soybean exports

• A 8.3% decline in corn exports

• A 8.2% decline in dairy exports

• A 8.1% decline in beef exports

• A 5.2% decline in sugar exports

On the import side, as businesses adapt and adjust their practices to account for the proposed measures:

• US rice imports could fall by 50.1%

• Fertilizer imports by 32.7%

• Vegetable oil and fat imports by 21.3%

• Beef imports by 13.6%

• Dairy imports by 13.5%

• Sugar imports by 7.2%

• Fruit and vegetable imports by 6.4%

US agricultural employment also could be slashed to account for increased costs and the changing import/export landscape, with more than one-third (33.8%) of wheat sector jobs and nearly one-fifth (18.9%) of soybean sector jobs lost over time.

“We are concerned that implementation of the proposed actions would present irreversible harm to our bulk agricultural exports and erode the strong trade surplus we now enjoy,” said Alejandra Castillo, president and CEO of the North American Export Grain Association. “We strongly encourage the administration to continue to explore alternative responses … that avoid harm to US farmers, producers, exporters and American families.”