US-China port fees to impact global crude and petrochemical flows

Eloise Radley examines how the port fees are disrupting trade routes and price dynamics, from crude tankers facing higher risk premiums, to US LPG losing price competitiveness, and ethane markets bracing for narrowing margins. With both countries set to escalate charges, the measures could have far-reaching consequences for global feedstock sourcing and petrochemical profitability

The latest round of US-China trade tensions has spilled into the maritime sector, with new port fees threatening to reshape global energy and petrochemical flows. Effective October 2025, these reciprocal charges are introducing new costs for crude and LPG carriers, raising freight rates and heightening uncertainty across international supply chains.

The implementation of these port fees adds an estimated 15% of crude tankers vulnerable to the fees.

David Jorbenaze, Senior Oil Analyst at ICIS, highlighted: “While supply volumes are not majorly threatened by the port fees, they are pushing up freight rates and causing cargo delays that subtly tighten near-term logistics”. Freight rates, particularly for Very Large Crude Carriers (VLCC), surged after the fees came into effect as shipping costs escalated.

He added: “In a market weighed down by oversupply, these frictions are unlikely to lift prices dramatically but will increase the risk premium and lend support to differentials, particularly Dubai spreads for cargoes heading to China.”

Impact of LPG flows

For refined products, the situation could be more complex. For LPG carriers, the bulk of the new port fee burden will be incurred at Chinese ports as more Very Large Gas Carriers (VLGC) on this route are US-owned and operated.

To avoid the fees, the international market will attempt to export US LPG to China using non-US-related VLGC, while China is expected to modestly reduce the proportion purchases of US cargoes.

Kojo Orgle, Market Analyst at ICIS, explained: “Layered on top of China’s existing 11% tariff on US LPG, these fees further erode US cost competitiveness. Chinese buyers are likely to lean more on Russian, Middle Eastern, Canadian and Australian supply.”

Orgle added: “In the case that Chinese LPG supplies tighten, we expect downward pressure on US propane as it loses price competitiveness into China.”

Impact of ethane flows

Conversely, due to contract structures and the US monopoly in seaborne ethane exports, ethane flows are expected to remain broadly steady in the face of port fees.

The US deferred implementation of its fees until 10th December 2025, meaning the ethane market is yet to experience the full impact. Unlike LPG, many Very Large Ethane Carriers (VLEC) are owned by Chinese cargo interests so a larger share of the fee burden will be felt at US ports. US ethane prices are expected to dip after the implementation of fees, while ethane margins are expected to narrow for Chinese crackers as landed ethane costs rise.

Analyst Lillian Ren in ICIS’s China team stated: “China is highly dependent on the US for ethane, meaning trade tensions between the two major economies adds great uncertainty for ethane availability for Chinese companies. We are hearing that some companies are thinking to further adjust their feedstock slates for their crackers to reduce dependency on ethane.”

However, the US Trade Representative has proposed the exemption of certain ethane and LPG vessels on long-term charters, so the ultimate impact of fees on arrivals to US ports remains uncertain.

Baclground

The implementation of port fees represents the latest iteration in the US-China trade war. US President Trump and Chinese President XI Jinping are scheduled to meet in South Korea this week in an attempt to reach a trade deal.

In February earlier this year, the US proposed action against Chinese-owned ships after a Section 301 investigation determined China’s acts, policies and practices to be unreasonable. In April, US President Trump issued an executive order outlining a maritime action plan, including details of the new port charge, which came into effect on 14 October. On 10 October, China announced it would be implementing retaliatory port fees against US vessels.

For Chinese owned or operated vessels arriving in the US, the port fee equates US$46/net tonne. Market participants expect this to be increased annually, although details for this remain unclear. For US-backed cargoes travelling to China, the initial rate is CNY400/tonne ($56/tonne) and will increase to CNY640/tonne on 17 April 2026. They will again be increased to CNY880/tonne from 17 April 2027 and CNY1,120/tonne from 17 April 2028.

	Chinese-backed vessels arriving in US	US-backed vessels arriving in China (converted to US$/tonne)*
October 2025	$46/net tonne	$56/tonne*
April 2026		$90/tonne*
April 2027		$124/tonne*
April 2028		$157/tonne*

* Currency conversion used on 28 October 2025

Eloise Radley is Senior Energy Market Reporter at ICIS, which provides data services, market insights and analytics solutions that help business make strategic decisions.