Our latest internal analysis provides an updated breakdown of the global tanker fleet’s exposure to Section 301 tariffs at U.S. ports. However, it is important to note that this exposure profile could evolve further as the tariff discussions progress.
What’s at stake? A new look at fleet exposure
Currently, the analysis indicates the following distribution, though changes are expected based on the final tariff decisions:
- ~80% of tankers calling US Ports are not Chinese-built.
- ~90% of these are not Chinese-operated (72% of total calls)
- ~10% are Chinese-operated (Tier 2 exposure, ~8% of total calls)
- ~20% of tankers calling US Ports are Chinese-built.
- 20% are Chinese-operated (Tier 1 exposure, 4% of total calls)
- 80% are non-Chinese-operated (Tier 2 exposure, 16% of total calls)
What this means
About 28% of the fleet faces potential tariff exposure, either under Tier 1 or Tier 2 categories. The financial impact is particularly significant for Dirty Tankers and MR2 Clean Tankers, with an increasing deployment of Chinese-operated vessels since early 2023.
However, under the new regime, vessels linked to international operators and falling under the MR2 category and below are exempt from the tonnage fee. As a result, some of these vessels may lead to the relocation of the operating companies to alternative markets, where the tariff impact can be mitigated, potentially shifting their operations outside China.
Understanding the Tariffs: Framework & Cost Drivers
Current latest Tarrif structure:
- Chinese-operated vessels: $50/Net Ton (NT), applied both laden and in ballast
- Chinese-built & Chinese-operated (Tier 1): $50/NT + $1.5 million flat fee (see footnote)
- International operators using Chinese-built vessels (Tier 2):
- Laden: $18/MT + $1.5 million flat fee (see footnote)
- Ballast: No fee
- Key Exemptions
- Vessels under 55,000 DWT (below MR2 class)
- Voyages under 2,000 nautical miles to the continental U.S. are exempt from the $18/MT fee.
The latter exemption primarily excludes Panamax Tankers transiting eastbound via the Panama Canal to ports south of Norfolk. In contrast, all westbound laden transits even starting from the Pacific side - Balboa (e.g., to U.S. West Coast ports) - exceed 2,000 nautical miles and will be subject to the $18/MT fee. However, the effect of the above will be muted.
Footnote:
There is some ambiguity regarding the applicability of the $1.5 million flat fee to all Chinese-built vessels. In light of the public comments and the guidance provided by the Section 301 Committee, the U.S. Trade Representative has decided not to impose any fee based on fleet composition at this time. Consequently, in our analysis, we have considered both scenarios—one incorporating the flat fee and one excluding it, since its not explicitly mentioned that flat fee is also replaced by the Tonnage fee as described in Annex II of USTR.
Cost Analysis by Tariff Exposure Scenario
Scenario 1: Non-Chinese-Built and Non-Chinese-Operated (No Tariff Exposure)
Analysis: These vessels are unaffected by tariff exposure.
Scenario 2: Chinese Operator Using Chinese-Built Ship (Tier 1 Exposure)
Fees: $50/NT (applies in both laden and ballast conditions) + $1.5M flat fee
This scenario includes the $1.5M flat fee, as outlined in the footnote above. It reflects a worst-case scenario of the maximum cost for affected operators.
| Vessel Type | Net Tonnage |
Volume | Tonnage Fee |
Flat Fee |
Total Cost |
Cost/Barrel (With Flat Fee) |
Cost/Barrel (No Flat Fee) |
| VLCC | 150,000 NT | 2M bbl | $7.5M | $1.5M | $9.0M | $4.50 | $3.75 |
| Suezmax | 80,000 NT | 1M bbl | $4.0M | $1.5M | $5.5M | $5.50 | $4.00 |
| Aframax | 60,000 NT | 700k bbl | $3.0M | $1.5M | $4.5M | $6.43 | $4.29 |
| MR (Clean) | 25,000 NT | 350k bbl | $1.25M | $1.5M | $2.75M | $7.86 | $3.57 |
Analysis: Tier 1 exposure leads to the highest cost burden. The combined tonnage and flat fees significantly inflate per-barrel costs, especially for smaller clean tankers.
Scenario 3: Chinese Operator Using Non-Chinese-Built Ship (Tier 2 Exposure)
Fees: $50/NT (applies in both laden and ballast conditions)
| Vessel Type | Net Tonnage | Volume | Tonnage Fee | Total Cost | Cost/Barrel |
| VLCC | 150,000 NT | 2M bbl | $7.5M | $7.5M | $3.75 |
| Suezmax | 80,000 NT | 1M bbl | $4.0M | $4.0M | $4.00 |
| Aframax | 60,000 NT | 700k bbl | $3.0M | $3.0M | $4.29 |
| MR (Clean) | 25,000 NT | 350k bbl | $1.25M | $1.25M | $3.57 |
Analysis: These vessels avoid the flat fee (should it be applied), but still face significant tonnage-based costs. In case the flat fee is not implemented, essentially the only cost applied is related to the Chinese Owner/Operator (tonnage fee) irrespective of the building country of the vessel.
Scenario 4: International Operator Using Chinese-Built Ship (Tier 2 Exposure)
Fees: Laden – $18/MT + $1.5M flat fee;
This scenario includes the $1.5M flat fee, as outlined in the footnote above. It reflects a worst-case scenario of the maximum cost for affected operators.
| Vessel Type | Net Tonnage |
Volume | Laden Fee ($18/MT) |
Flat Fee |
Total Cost |
Cost/Barrel (With Flat Fee) |
Cost/Barrel (No Flat Fee) |
| VLCC | 150,000 NT | 2M bbl | $2.7M | $1.5M | $4.2M | $2.10 | $1.35 |
| Suezmax | 80,000 NT | 1M bbl | $1.44M | $1.5M | $2.94M | $2.94 | $1.44 |
| Aframax | 60,000 NT | 700k bbl | $1.08M | $1.5M | $2.58M | $3.69 | $1.54 |
Ballast Only: No fees applied.
Strategic Implications for the Tanker Market
- Freight Cost Inflation
- VLCC, Aframax and MR2 segments are most affected as shown in figures 4, 4a,4b. Under the framework linked to Chinese-built and operated vessels, those segments are particularly vulnerable to rising freight costs.
- WTI-linked exports could lose ground to Dubai crudes
- Route Rebalancing
- Chinese-linked tonnage may pivot away from U.S. routes
- Intra-Asia and Med trades may absorb redirected capacity
- Commercial Route Disruption
- Triangulated trades involving U.S. legs could become uneconomical
- Non-Chinese-linked vessels will likely command route premiums
- Market Reaction in S&P and Newbuilds
- Non-Chinese-built vessels gain in asset value
- Delayed but eventual shift in newbuilding orders to non-Chinese yards, although this will be very difficult in our opinion due to the extensive share of China’s new building program.
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