Editor's note: The article, written by Chen Jihong, Distinguished Professor and Ph.D. Supervisor at Shenzhen University, also Dean of Shenzhen International Maritime Institute, reflects the author's opinions and not necessarily the views of CGTN.

The Section 301 restrictions recently announced by the US government target Chinese shipping operators and global shipping enterprises with Chinese-built vessels, aiming to exert pressure by charging additional fees. However, this seemingly minor move could influence the global landscape. Like a stone cast into a still pond, the proposed measures will trigger ripple effects in global supply chains, aggravating inflationary pressures in the US and undermining the very foundations of global supply chain security and stability.

Relevant costs will inevitably be transmitted along the supply chain to American importers and consumers. Meanwhile, associated fees and restrictions will worsen congestion at major US ports, sharply increase pressure on port collecting and distributing systems, and throw US logistics networks into disarray. These disruptions could set off a domino effect that will not only leave the US bearing the brunt of the consequences but also weaken the flexibility and resilience of global supply chains.

Additional port charges will ultimately raise costs and intensify the US inflation crisis

The supply of consumer goods in the US market is heavily dependent on containerized maritime shipping. Should the US unilaterally impose steep port charges on vessels, global shipping companies would be forced to raise freight rates. These rising costs will inevitably be passed on to US importers and ultimately to end consumers, fueling overall price hikes and placing further financial strain on US household expenditures. According to related IMF research, shipping costs are an important driver of inflation around the world. When freight rates double, inflation picks up by about 0.7 percentage point.

Over the past five years, inflation in the US has continued to worsen. Data from the US Bureau of Labor Statistics shows that the Consumer Price Index (CPI) rose from 257.97 in January 2020 all the way to 308.41 in December 2024. With domestic prices at historic highs, the US is facing its most severe inflationary pressure in nearly four decades. If the US proceeds with additional port charges, price levels and inflationary pressure will spiral further out of control. The World Shipping Council (WSC) has warned that these measures amount to a de facto tax. Not only will they increase the cost of imports and worsen inflation, but they may also deal a blow to the more than $750 billion worth of US maritime trade, damaging export-dependent industries and job markets.

Furthermore, such measures are likely to prompt shipping companies to adjust their capacity allocations. Their average profit per voyage on US-bound routes typically ranges from hundreds of thousands to several million dollars. Imposing hefty port charges would compel shipping companies operating on US routes to reduce port calls or withdraw from the market altogether, resulting in structural shortages and driving freight rates even higher. Research indicates that a 1 percent reduction in shipping capacity could lead to a two percent–five percent rise in freight rates. As capacity shortages further push up freight prices, these costs will eventually be passed on to US importers and consumers, further intensifying the inflation crisis in the country.

Port congestion in the US will worsen, paralyzing the logistics network

If the proposed port charges take effect, shipping companies will likely prioritize large ports with higher handling capacity to minimize unit costs, thereby intensifying congestion at major ports while sidelining smaller ones. It is foreseeable that major ports like Los Angeles and Long Beach could see throughput surge by 30 percent to 50 percent, far exceeding the intended capacity of their infrastructure and creating severe bottlenecks in the logistics network.

Consequently, port productivity will decline, vessel dwell times will lengthen, and the logistics chain will become increasingly encumbered, causing a steep rise in overall supply chain costs. The Overland Common Points (OCP) and Inland Point Intermodal (IPI) models, primarily used in the US, heavily depend on seamless integration between ports and overland transport. Once port operations stall, cargo turnover cycles and inland transport distances will inevitably increase. For low-value goods such as furniture and agricultural products, the proportion of logistics costs could exceed the break-even threshold.

The International Chamber of Shipping (ICS) has warned that port congestion could push container shipping rates up by 43 percent to 71 percent. Given that the US logistics network is already under considerable strain, this additional shock will almost certainly lead to supply chain gridlock, rising costs, and elevated market uncertainty, further influencing business investment and the overall efficiency of the US supply chain.

Negative Chain Effects Will Be Amplified, Undermining Global Supply Chain Security and Stability

The disruptions caused by gridlock in the US domestic logistics network will spread through the global supply chain. Therefore, the US risks becoming a "dammed lake" within the global supply chain network, weakening the resilience and undermining the security and stability of global supply chains. If relevant measures are implemented, shipping giants will promptly adjust their capacity allocations and reduce sailings on US-bound routes. This will result in operational bottlenecks across logistic systems such as major and minor US ports, as well as inland collecting and distributing networks. In the medium to long term, however, the chain effects of these disruptions may intensify, transport cycles will be forced to lengthen, and volatility across supply chains will rise. Thus, global supply chains will face a domino-style collapse.

Major international shipping companies will likely adopt long-term strategies to establish "parallel fleets" globally and redeploy vessels across international routes, effectively detaching global maritime supply chains from the US network. As a result, fragmented and fractured maritime supply chains are inevitable around the world, complicating fleet scheduling, raising costs, and significantly increasing the risk of global supply chain disruptions.

In sum, these ill-considered measures by the US are unlikely to achieve their intended goal of imposing unilateral pressure. Instead, they are poised to deliver a severe blow to the US economy, exacerbate inflation, and harm US enterprises and consumers alike. In the end, this short-sighted protectionism by the US will backfire, hurting the US more than any of its intended targets.