The U.S. and China have escalated their trade conflict to the maritime sector, launching reciprocal port fees on vessels operating between the two countries. The move marks a significant expansion of the trade war, with global shipping firms now caught in the crossfire of economic and geopolitical rivalry.

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Starting Tuesday, both nations began collecting additional port charges on ocean carriers transporting goods ranging from consumer products to crude oil. The simultaneous rollout of the fees effectively turns global shipping lanes into the latest battleground in the economic standoff between the world’s two largest economies.

Tensions surged last week after China announced a sweeping expansion of export controls on rare earth elements—a key component in advanced electronics and defense systems—and President Donald Trump threatened to impose triple-digit tariffs on Chinese imports. Yet both sides appeared to soften their rhetoric over the weekend, signaling continued engagement between negotiators.

According to Chinese state broadcaster CCTV, Beijing’s new rules apply to all U.S.-owned, operated, built, or flagged vessels but exempt Chinese-built ships and empty vessels entering domestic shipyards for repair. Like the U.S. measure, the fees will be levied either at the first port of entry on a single voyage or over the first five voyages within a year.

“This tit-for-tat symmetry locks both economies into a spiral of maritime taxation that risks distorting global freight flows,” said a research note from Athens-based Xclusiv Shipbrokers.

The Trump administration first introduced its port fee plan earlier this year, framing it as part of a broader effort to weaken China’s dominance in global shipbuilding and strengthen U.S. maritime manufacturing. The policy followed a Biden-era investigation that accused China of using unfair practices to control global shipping and logistics markets.

China responded in kind, announcing identical port charges on U.S.-linked vessels effective the same day. “If the U.S. chooses confrontation, China will see it through to the end; if it chooses dialogue, China’s door remains open,” the Chinese commerce ministry said in a statement.

Industry analysts warn the escalating measures could severely disrupt global trade routes. “We’re in the hectic stage of disruption, where everyone is quietly trying to improvise workarounds,” said dry bulk shipping analyst Ed Finley-Richardson, who noted reports of U.S. shipowners diverting cargoes mid-voyage to avoid new charges.

Container giant COSCO is expected to bear the largest financial burden, with analysts estimating it could absorb nearly half of the $3.2 billion cost associated with the fees in 2026. Major lines such as Maersk, Hapag-Lloyd, and CMA CGM have already adjusted their networks to limit exposure to China-linked vessels on U.S. routes.

The U.S. Trade Representative (USTR) declined to comment on the development.

Beijing also imposed sanctions on five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, accusing them of assisting a U.S. probe into Chinese maritime practices. Hanwha, which operates Philly Shipyard and builds vessels for the U.S. Navy, said it is monitoring the situation closely. Hanwha Ocean shares fell nearly 6% following the announcement.

Shipping analysts say the full impact of the port fees could extend across multiple market segments. Vortexa identified 45 liquefied petroleum gas (LPG) carriers—roughly 11% of the global VLGC fleet—subject to the new Chinese charges, while Clarksons Research reported that oil tankers representing 15% of global capacity may be affected. Jefferies estimates that 13% of crude tankers and 11% of container vessels could face higher costs.

The U.S. has announced limited exemptions for long-term charterers transporting ethane and LPG, delaying port fees until December 10.

Meanwhile, the trade confrontation is beginning to merge with climate policy disputes. In response to China’s rare earth restrictions, Trump threatened new 100% tariffs on Chinese goods and proposed export controls on critical software by November 1. U.S. officials also warned that nations supporting the International Maritime Organization’s plan to cut shipping emissions could face sanctions or port restrictions—a direct shot at China, which backs the initiative.

“The weaponization of both trade and environmental policy shows that shipping has shifted from being a neutral conduit of global commerce to a direct instrument of statecraft,” Xclusiv said.

Despite the turmoil, shares of China’s COSCO rose over 2% on Tuesday after announcing plans to buy back up to 1.5 billion yuan ($210 million) in stock to stabilize investor confidence.