Section 301 tariffs update: The elephant stirs

By Gary Williams, SSGA Director of Transportation & Regulatory Affairs 

In a favorable turn based upon hearing and considering comment on the initial proposal set forth by the U.S. Trade Representative (USTR), a revision was released April 17 noting a summary of comments made, and the resulting change in proposal for Section 301 tariffs regarding ship build. 

Among these: 

  1. A shift from a flat fee mechanism to a net tonnage basis for any China-built ship starting at $0 from Oct. 14, 2025, increasing to $50 per net ton after 180 days, and increasing thus on an annual basis for three years (or the higher of this or a per container fee). 
  2. Now, only the first port of entry will result in a charge being levied instead of a charge at each port stop on a route. This would have meant ports such as Oakland were likely to get dropped and predicted high congestion at ports such as Los Angeles.
  3. Any such fee on a vessel would be limited to being assessed five times per year – puts a ceiling on some of the costs attributed to a single vessel plying a regular route.
  4. The definition of the affected is now described as any Chinese vessel operator and on any vessel owned by Chinese entity.
  5. U.S. vessels enrolled in certain U.S. Maritime Administration programs, vessels arriving empty or in ballast, smaller vessels and specialized export vessels are all exempt.
  6. “Credit” remains in place upon order and until delivery for any U.S. built vessel of equal or greater capacity to offset a China-built vessel penalty for a period not to exceed three years.
  7. USTR has withdrawn the penalties originally proposed for orders of vessels at Chinese shipyards.
  8. Vehicle carriers were added to the list of vessels that would be penalized if China-built.
  9. The export tariffs originally proposed for using China built vessels was eliminated, save for LNG exports, which would phase in starting in 2028, and gradually increasing over a period of 22 years. Exporters would need to have reached a threshold of using at least 15% U.S. built vessels by 2047.
  10. Ship to shore cranes manufactured, assembled, or using components of Chinese origin (or manufactured anywhere in the world by a Chinese owned entity), are targeted for duties up to 100%. Additional cargo handling equipment of China would also be subject to the same (containers, chassis, chassis parts, spreaders/twist locks). 

The USTR was thorough in providing feedback on summarizing what commenters had said both in support and opposed to the original proposal as written. I read many of the written comments submitted during the comment period and found I agreed with their summations. They further invite comments, which opened April 17, and will close May 8, regarding:    

  1. The specific products to be subjected to increased duties, including whether ship to shore cranes, chassis, and containers should be retained or removed (or if anything should be added).
  2. The level of increase, if any in the rate of duty. 
  3. Whether the increased duties should take place at once in 180 days, or be phased in from six months to 24 months. 

The Section 301 committee will convene a public hearing May 19, 2025. 

Certain positives exist in view of the process. First, USTR was willing to eliminate some of the proposed revisions and considered comments on impacts detrimental to exporters as well as importers. Second, they have worked in a “shock factor” to give at a minimum six months from October 2025 (April 2026) for the supply chain to consider alternatives, and more time for ship build capacity in the U.S. to progress so that there is more of an opportunity to mitigate costs. 

Some calculators have been at work and seemingly $120/container is a working number of what would be expected in costs likely passed along – presumably to be allocated between import and export use of the container, product value carried, etc., and likely embedded in container lines quoted rates, although they might show initially as they have for security fees and alameda corridor fees in the past. 

Whatever the comments made on the next round, it seems they will need to provide a solution or alternative that should be sought to correct for the intended purpose of penalizing China’s believed manipulation to gain control of the ship build market share globally, and to revitalize U.S. ship building capability. USTR’s comments are clear that asking them to “forget the whole thing” is not in their interest.   

We’d like to get your feedback as well. Contact Competitive Shipping action team Chair Tina Lyons or myself with your thoughts, comments or questions. 

On the move: SDSRPC sponsors Transportation Go! conference

Transportation is essential to South Dakota farmers. Being a mostly agricultural state that exports nearly 40% of its farm products, commodities need to find their way out of the state to trade partners around the world. However, being located in the middle of the country creates some roadblocks.  

“The distance is some of it,” said Derrick Scott, District 2 director and Treasurer of the South Dakota Soybean Research & Promotion Council (SDSRPC). “We have somewhat of a rail network – it does the job but it’s not as expansive as other states. We don’t have use of our river due to the dam system that is on it, so we aren’t able to transport via water.” 

These issues were some of the topics of discussion at Transportation Go!, hosted by the Specialty Soya Grains Alliance (SSGA) in Minneapolis in March. SDSRPC is proud to sponsor the event. 

“This was my first time there, and I was very happy with the meeting: great group of speakers, great lineup,” Scot said. “They really delved into all different facets of transportation. We’re going to get more members to go next year.” 

With 60% of South Dakota’s soybeans leaving the country, it’s imperative that the soybean checkoff invests in projects and events like Transportation Go! to ensure their products arrive to customers. South Dakota soybeans typically leave the U.S. via the Pacific Northwest for countries in Southeast Asia. To get there, they are shipped by truck or rail – South Dakota has an interstate highway system and direct rail lines to the West Coast. This infrastructure allows products to leave the country cheaper and faster than competitors. 

“South America is our main competitor for soybeans, and they have a lot of issues when it comes to transportation,” Scott said. “The United States is leaps and bounds ahead of them as far as getting our product moved in a safe and in a quick nature. We’re able to get things out of here quickly, and the quality is maintained along that transport chain.”  

South Dakota lawmakers are also active in supporting agricultural transportation. In Washington, D.C., Senate Majority Leader John Thune has supported bills such as the Ocean Shipping Reform Act, which was passed into law in 2022. 

“The Ocean Shipping Reform Act was pivotal, as it defined the role of the Federal Maritime Commission as having authority to rule upon and assess penalties upon container carriers on matters for example, relating to detention and demurrage charges without proper information being documented or a process to dispute charges,” Gary Williams, director of transportation and regulatory affairs for SSGA, said. “Shippers’ rights and fairness are now protected by this process of being able to present their case to the FMC for investigation.” 

SDSRPC also invests in organizations like the Soy Transportation Coalition, which seeks efficient transportation for soy shippers and customers.  

Argus Murmurings: Argentina FX change will support exports to US

Organic soybean imports in March 2025 were estimated at 19,600 MT, down 31pc from the same month in the prior year. Ukraine supplied 16,000 MT and Canada supplied the remaining 3,600t. 

The Argus AgriMarkets Organic and non-GMO service weekly delivered spot price for feed-grade organic soybeans delivered to the U.S. Corn Belt for the week ended April 17, 2025, was $20.29/bushel, which is up $0.15 from a month prior and $0.81 from a year prior.  

The devaluation of the Argentinean peso will make Argentinean organic soybeans more price-competitive in the U.S., market contacts said. The devaluation of the peso will make Argentinean imports cheaper for U.S. buyers and Argentinian farmers will receive more pesos per dollar. 

There are little-to-no-remaining stocks of old crop organic soybeans remaining in Argentina, but the devaluation will affect new crop sales, market contacts said. New crop sales so far were below historical levels because of buyers hesitating to lock in volume before there was more certainty on tariffs. Lower buying activity from typical U.S. importers could leave more organic soybeans to be purchased by other importers. 

Shipments of new crop organic soybeans will begin in June, market contacts said. Argentinean farmers increased their organic soybean acreage because of the low profitability of organic corn. A drought earlier in the season did damage the crop, but yields are expected to be close to historical levels. 

Tariffs and… tariffs: where do we go from here

By Gary Williams, Director of Transportation & Regulatory Affairs

You can’t even call it the elephant in the room – the tariff elephant is smoking a pipe, with comfy loafers on and reclined in the living room by the fire in my house.

I’m sure you, like myself, go through your daily work, tackling what needs to be done and ensuring that what is charged of you to continue gainful employment and ensuring viable business happens. If you are also like me, every fourth or fifth thought goes to, “but what if…”

Here’s what we do know about the Section 301 proposal on China-built ship tariffs:

The U.S. Trade Representative (USTR) closed their comment period March 25, as reported in last issue, and SSGA participated in providing written comment. A copy of that comment letter is linked here.

SSGA further provided a signature as a supporting party along with more than 320 parties on a coalition of shipping and importing organizations on a letter drafted by the National Retailers Federation and an even larger number of signatures (perhaps double) of agricultural organizations and companies on a letter drafted by the National Grain and Feed Association.

Several organizations were called upon to give comments to the USTR in the week that followed, and a letter was drafted to the USTR by 18 members of Congress to express concern on impacts.

It’s expected by mid-April we will get our next look at what USTR has modified (or not) in the Section 301 proposal on China Built Ship Tariffs.

There is absolutely no doubt that any tariffs that are implemented will be passed through to be paid by the shipper (unless exemptions are issued). Some container lines have already issued their policy that ANY costs associated with tariffs will be for the account of the shipper. If you have containers headed to the port, and an effective date of May 1 is reached, for example, that box will be assessed the fee that the steamship line (SSL) deems as representative of their likely cost due to the tariff being imposed. It’s cloudy whether these fees would be due immediate/upon freight bill becoming due for payment, or at a quarterly or annual billing date. It’s also unclear whether that fee will be weighted by value of the freight bill being paid (import pays a much larger portion or fee than ag export), whether it’s a flat fee, or how a calculation is made. One assumes that SSLs have some understanding of where the cost structure breaks ag exports, so one assumes it will be weighted.

In a time that SSGA has had a constant drumbeat on the obligation inherent in conveying goods into the U.S., carrying with it an obligation to provide conveyance for U.S. exports, an overburden of these tariffs placed on the exporter will certainly break their back and create a state of duress for our members.

According to the USTR proposal, there is presumably a credit that is earned against tariffs for placing a U.S.-built vessel into port – I don’t know if the SSLs are creating a mechanism to credit this back, or it’s considered a “windfall” when it happens.

The container exporter is powerless to ascertain or make demands upon an SSL to provide non-China built ships, and/or owned by owners with a very low number of China-built vessels in their fleet, so exporters are price takers, not makers, and will dig out of their wallets accordingly.

What will the final version look like? The elephant keeps repeating “no comment.”

Make your mark in shipping: Join SSGA action team

There can be little question left at this point how important transportation is to SSGA ‘s member companies, or the impacts that policies, geopolitics, transportation provider decisions, domestic policy and influencers can have upon these same members.

Our needs are specific at times, even with a great amount of commonality to larger generic commodities. SSGA is the voice for these needs and draws attention to the impacts created barriers will have.

While holding an interest to be collaborative, and ensure we are communicating our stance and needs to similar organizations, SSGA’s Competitive Shipping action team is made up of members that have taken a vested interest in guiding SSGA’s focus and working to identify and provide transportation solutions specific to specialty soya and grains when issues arise. This better assures that those needs are considered for our members to prosper and grow.

Keep an eye for a meeting invite for the quarterly meeting update meeting of the Competitive Shipping action team coming soon. Chair Tina Lyons and SSGA Director of Transportation & Regulatory Affairs Gary Williams are working on a date, time and agenda. If you have an agenda item you want to ensure is discussed in the meeting, or are interested in joining the action team – please let Tina Lyons or Gary Williams know.

Section 301 ‘China Built Ship Tariff’ proposal explained

By Gary Williams, Director of Transportation & Regulatory Affairs 

Ahead of comment, I found myself digesting the U.S. Trade Representative (USTR) proposal with Competitive Shipping action team Chair Tina Lyons and outlining the impacts that would hit most SSGA members disproportionally as suppliers of a FOOD product rather than a COMMODITY.    

For those who have yet to get their arms around the proposal, I will greatly condense it into five parts: 

  1. EACH PORT ENTRY in the U.S. in which a vessel built in China calls will be assessed a tariff amounting to $1,000 per ton of vessel capacity, up to $1 million at each port in the U.S. it calls. Trade routes that have more than one call on the West Coast would be assessed at each stop. In the Great Lakes, each U.S. port stop would again result in a new tariff assessment, including vessels that transport between Canada and U.S. 
  1. EACH PORT ENTRY, depending on the percentage of fleet that an owner has comprised of China-built vessels, that operator will be assessed an additional $500,000 to $1.5 million in tariff per vessel call. 
  1. EACH PORT ENTRY, any owner with over 50% of their orders in the next 24 months for shipbuilding comprised of China-built vessels will be assessed an additional $1,000,000, scaling down to $500,000 if that amount is less than 25% of orders. 
  1. On a staggered scale and hitting the maximum in seven years following the date of action, the export of at least 15 percent of U.S. goods, per calendar year, is restricted to export on U.S.-flagged vessels by U.S. operators, of which 5 percent must be U.S.-flagged, U.S.-built vessels by U.S. operators. Further, U.S. goods may be approved for export on a non-U.S.-built vessel provided the operator providing international maritime transport services demonstrates that at least 20 percent of U.S. products, per calendar year, will be transported on U.S.-flagged, U.S.-built ships by the operator. 
  1. An owner can earn credits against these tariffs of $1 million for each U.S. flagged, U.S.-built ship that the owner enters into a U.S. port. Estimates I’ve read state that this is perhaps less than 2.6% of the global fleet. The capability to build out the U.S. fleet to meet the export requirements and offset or avoid tariffs being assessed appears impaired in being able to reach the needed amount of vessels by these dates, and/or to offset tariff assessment. 

The Competitive Shipping action team comment letter to USTR urging for consideration in adjusting the current proposal outlines the devastatingly negative impacts upon our members. Many of these members have spent decades building direct market relationships that could go away completely in the face of impossibly high food cost for the destination country. 

 We hope to be involved in the conversation with those who have influence in Congress and in the administration so that our impacts can be understood and considered. 

Step into the driver’s seat and fuel your mind at Transportation Go!

As the premier conference for soybean and grain transportation and trade issues in the Midwest, Transportation Go! is putting the industry’s top stakeholders in the driver’s seat with a complete set of distinguished speakers, panel discussions and more, offering a full tank of knowledge to everyone that enters the doors. 

“Transportation Go! is uniquely oriented to the transportation opportunities and issues of the value-added specialty grains and oilseeds industry,” said Gary Williams, Specialty Soya and Grains Alliance (SSGA) director of transportation and regulatory affairs. “While other transportation conferences provide a value in emphasizing imports by container, a wide-angle lens on ag products, or bulk commodity perspectives, this conference carves out what is relevant for these shippers and buyers.” 

Hosted by SSGA, the event brings together boots-on-the-ground commodity growers, organizations, traders and shippers of specialty crops, offering in-depth discussions on the global supply chain and how it affects the vital movement of agricultural products domestically and around the world March 12-13 in Minneapolis. 

“We are able to attract decision makers and influencers such as the Federal Maritime Commission, Surface Transportation Board, U.S. St. Lawrence Seaway Administration, Department of Transportation, legislators, state departments of agriculture, commodity associations, and other agencies to hear and learn more about our transportation issues, needs, and barriers face-to-face,” Williams said.  

The conference is also known for pulling the entire transportation supply chain into the conversation, including CEOs of the Port of Los Angeles and Northwest Seaport Alliance, rail roads and container carrier lines. 

“Our conference presents today’s cross-section in transportation in identity preserved products, while always asking the question of what we can expect or change for what lies ahead,” Williams said.  

To help navigate what’s on the horizon, Transportation Go! has a full lineup of distinguished speakers, including Daniel Maffei from the Federal Maritime Commission, John Wolfe of the Northwest Seaport Alliance, Gene Seroka with the Port of Los Angeles, Sten Könst with Spliethoff, Dr. Sal Mercogliano with Campbell University, Hardy Pearson with Hapag-Lloyd and Joe Jobe with SABR.  

“The ability to interact with extremely high approachability, and have your questions responded to is a major selling point of this conference in March each year,” Williams said. “We rotate the conference purposefully to highlight where issues and opportunities are, and to foster new ideas, and participation by different minds in the country, while ensuring we deliver on providing very rich content from the top subject matter experts we can find.” 

Registration is open at www.transportationgo.com/register-now/. Early bird registration is available through Jan. 31, 2025. Sponsorship information is available at transportationgo.com/sponsors/  

SSGA’s annual meeting will be held in the same location on March 11. The annual meeting will reflect on the successes from the past year and look ahead to the future. Board of Directors elections will be held, and the annual SSGA Alliance Honors will be presented at the meeting. The annual meeting is free for members, but pre-registration is requested. Non-members can register for $55. 

SSGA meets on inland ramps, administration change

By Gary Williams, Director of Transportation and Regulatory Affairs

A delegation of SSGA representatives recently visited Washington, D.C., to meet with U.S. Department of Transportation, the Federal Maritime. Commission and other national organizations. The delegation included Tina Lyons, chair of the Competitive Shipping Action Team, SSGA Board Chair Bob Sinner, and Director of Transportation and Regulatory Affairs, Gary Williams.

In meetings with the National Grain and Feed Association (NGFA) and North American Export Grain Association (NAEGA), discussions were held about priorities for the coming year and a recap of progress and events of the past year. Williams and Lyons met with the associations to give updates on our segment of value added and identity preserved grains and oilseeds, particularly on barriers faced in inland equipment availability for export, and our ongoing project in advancing the utilization of the St. Lawrence Seaway as an alternative for container imports and exports. Alejandra Castillo, the Executive Director of NAEGA, will speak at the Identity Preserved International Summit in Honolulu Feb.18-20, about electronic documentation in exports.

The tandem also met with the National Waterways Council to learn of their priorities involving the inland waterways and provide an update on SSGA’s work on the Great Lakes.

SSGA Chair Bob Sinner has spearheaded a consideration with the USDA Sec. Tom Vilsack, involving the Port of Los Angeles, carrier line representatives, rail and numerous agricultural product exporter associations (including SSGA) to discuss potential solutions that might help better provide access for inland agricultural concerns to reach foreign markets, particularly value-added products such as members prevalently are wanting to sell and ship. The meeting of all the layers in the supply chain to discuss this type of transportation barrier was “unprecedented” in either of Sec. Vilsack’s two terms according to the Secretary. Collectively, value was determined to be garnered by advancing the conversations, and SSGA will continue to be involved in the conversation.

Sinner, Lyons and Wiliams met with current Federal Maritime Commission (FMC) Chairman Dan Maffei to discuss the Commission’s expected priorities coming into the administration transition. With Carl Bentzel departing the FMC, a new Commissioner appointed by the President will join the four remaining Commissioners, with the Chairman typically appointed by the President. Current Chair Maffei is planned as a speaker at SSGA’s upcoming Transportation Go! March 12-13 in Minneapolis.

Rounding off the week, Lyons and Williams met with Allison Dane-Camden from the Department of Transportation (DOT) and Adam Tindall-Schlicht and Tony Fisher of the St. Lawrence Seaway (SLS) Administration. They debriefed SSGA’s networking and outreach event in Rotterdam, Antwerp and Amsterdam held in September with the Minnesota Department of Agriculture and association representatives from Minnesota, Wisconsin and Illinois. Peter Hirthe of SLS, Tindall-Schlicht and Dane-Camden were large components of the event educating those that influence transportation decisions on the value of the Great Lakes and the SLS as a consideration for the transportation of their goods, whether importing or exporting. A review of intended next action steps and activities were discussed with DOT and the SLS during the Washington, D.C., meeting as a springboard for discussion as the new Administration takes their place in Washington.

East and Gulf coasts brace for impact

By Gary Williams, SSGA Director of Transportation and Regulatory Affairs

Shippers and importers are bracing for a storm on the East and Gulf coasts as the International Longshoremen’s Association (ILA) Union issued stern warnings and strong rhetoric last week. Two main issues loom. The first is an offer by U.S. Maritime Alliance (USMX) management for a 32% pay increase that is being rebuffed by the labor union as far below their ask of a 78% pay increase that is based upon wanting a share of the record profits obtained during the pandemic by ocean container carriers.

Second is the union’s fight against port automation. The ILA submits that wage increases aren’t worth anything to workers that have been eliminated by automation.

The pessimism is growing regarding an agreement being reached before the strike date of Oct. 1, as evidenced by articles in major national publications close to the container industry.

While President Biden will have at hand the Taft-Hartley Act to invoke to bring union workers back to work, the union has pledged to work in extreme slowdown if ordered back. The outcomes for the Trudeau administration intervening were very negative, with a possible early election being called for, which would be expected to go in favor of the Conservatives should the NDP break away from their alliance with the Liberal party there as a reaction to the strike intervention.

Having recently watched the scenario in Canada with rail workers being locked out and immediately ordered back to negotiations and continuance of work, all involved are in a difficult position: Labor is firm on wanting their “piece of the pie” and a labor agreement that exceeds the most recent ILWU contract. USMX is poised to resist as importers and shippers warn of much higher costs charged back to them having a major effect on imports and exports.

With the election on the horizon, the Democratic Party (often considered pro-union) could face potential political backlash from unions if President Biden chooses to intercede, while standing aside could disrupt 60% of the U.S. container volume, valued at $588 billion annually.

The disruption is too great not to affect all other ports, and customers should be made well aware that West Coast execution will most likely experience significant challenges should the strike go into effect for even a short period of time.

Strategizing the St. Lawrence Seaway’s potential: SSGA hosts transportation mission to Netherlands, Belgium

By amplifying the global visibility of the St. Lawrence Seaway, the Specialty Soya and Grains Alliance (SSGA) accomplished a key goal during a first-of-its-kind ag transportation mission to Europe’s largest seaports in Belgium and the Netherlands Sept. 2-6. But a checked box is just a first step in what SSGA has learned in a long, but attainable to-do list ahead.

“What has happened here, is that we’re on the cusp of change,” said Eric Wenberg, executive director of SSGA. “The right people are meeting and talking to each other. This trip is not a trade promotion trip. This is a transportation preference trip. We need to make it clear that the U.S. does have transportation access to these ports and onward to the rest of the world if we need it, but we’re asking the stakeholders to choose a preference from the U.S. and reconsider the Great Lakes.”

Exploring the interconnectivity of commerce

SSGA brought in stakeholders from all over the Midwest, including Wisconsin, Illinois and Minnesota soy checkoff leaders, the Department of Transportation, USDA and Great Lakes St. Lawrence Seaway Development Corporation, to participate in several networking opportunities and tours to discuss the potential benefits of the St. Lawrence Seaway being chosen as the gateway of choice.

“We need supply chain resiliency and redundancy in the Great Lakes St. Lawrence Seaway system,” said Peter Hirthe, international trade specialist with the Great Lakes St. Lawrence Seaway Development Corporation.

Attendees witnessed how industry leaders stay one step ahead at Hutchison Port ECT, recognized as one of Europe’s leading container terminal operators. The terminal utilizes semi-automatic cranes and automated guided vehicles to move containers, enhancing operational efficiency and safety. That followed with a trip to the World Port Center, Samga grain terminal in Belgium and more, giving SSGA and other leaders from the U.S. the opportunity to learn about the interconnectivity of commerce between Europe and the rest of the world.

“From a business development standpoint, success in business development has relied on finding a need. A lot of times the customer doesn’t know what it is they need and what it is that would make it better. Redundancy and resilience-that’s what a lot of our job is going to be, finding the defined needs and coming up with a creative solution,” Gary Williams, SSGA’s director of transportation and regulatory affairs, said.

Joining forces

Through conversations with colleagues and maritime industry leaders from Europe, feelings of optimism grew during the four-day visit.

“The planning of this and the way this was done was extremely unique, but it worked,” said SSGA Chair Bob Sinner. “It’s hard to know who we should have in the room for these types of discussions. To have a room full of logistics providers made sense because they have a lot of companies that export to the U.S. As a shipper, I’m extremely grateful for the understanding of our history and complexities and how difficult freight can be for companies like us.”

U.S. attendees also made it a priority to highlight the importance of the St. Lawrence Seaway at each of the week’s several networking meetings.

“We shared information about the St. Lawrence Seaway, like the fact that it had 99.4% on-time deliveries, that it is very environmentally sustainable and is a direct path to Rotterdam,” said Gail Donkers, who represents MSR&PC on SSGA’s board of directors. “Our trade mission delegation had time to meet with the transportation specialists to discuss our objectives and look at how each company could benefit from shipping goods along the St. Lawrence Seaway as a back haul.”

Finding a route for success

The visit wrapped up with an opportunity for U.S. attendees to gather to brainstorm, reflect and develop a vision for what the next steps entail.

“What we’ve learned on the trip is that there are billions of dollars being invested in infrastructure,” Wenberg said. “Being here to talk to the U.S. administration, and embassy in these ports along with the St. Lawrence Seaway administration means we can continue to target and support the infrastructure developments we need to support the Lakes system.”

For SSGA, this unique mission is only just beginning in further optimizing the St. Lawrence Seaway and will require collaboration from the region to find success.

“It really is a connection to Europe,” Wenberg said. “Sixty percent of the economy of the EU is within 500 miles of these ports in the U.S. If Europe wants to connect with our consumers in Toronto, Canada and Chicago and our eight Great Lakes seaway states, we have to build this trade force together.”