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There are signs that some downsides of the higher tariffs are starting to emerge, the IMF outlook said.
Beijing has fired its latest salvo in the simmering US-China trade war-not through semiconductors or soybeans, but through ships. China imposed sanctions on the US subsidiaries of South Korean shipbuilding giant Hanwha Ocean Co, citing the company’s support of an American trade probe as grounds for economic punishment.
TL;DR: Driving the news
- China sanctioned the US units of South Korea’s Hanwha Ocean and warned of more retaliatory steps across shipping - a fresh front in the escalating China-US trade war just as both countries roll out tit-for-tat port fees.
- The move “helped fuel a slump in global equities” and signaled a broader fight over maritime dominance, Bloomberg reported. “This is a broadening and expansion of the ongoing trade conflict,” Deborah Elms of the Hinrich Foundation told Bloomberg. “It’s no longer just about tariffs and export controls, but which firms have the ability to operate in which markets. If this continues, a lot more economic activities are at risk.”
- At the same time, the US began charging fees on Chinese ships docking at American ports - penalties aimed at countering China’s shipbuilding supremacy and nudging orders away from Chinese yards.
- “Anything we can do to chip away at the disparity in shipbuilding that exists between the United States and China is to our benefit,” Mihir Torsekar of the Coalition for a Prosperous America told the NYT.
Why it matters
- Ships move over 80% of global trade, so port levies and sanctions can ripple through everything from crude and LNG to toys and sofas, raising shipping costs and delivery times across supply chains.
- Allies are in the crosshairs. By sanctioning Hanwha’s US units, Beijing is warning third-country firms that help Washington they could lose China access - a pressure test for South Korea and others balancing security ties with US market exposure.
- Capacity reshuffle = higher costs. Carriers are already reassigning ships to dodge fees on Chinese-built vessels calling at US ports; analysts say 11% of container ships and 13% of crude tankers could be affected, a meaningful slice that can snarl routes and lift rates.
- China’s scale advantage is stubborn. With 60% of global large-vessel output in 2024 and faster, cheaper builds, China’s yards remain hard to dislodge - meaning US fees may re-route traffic more than they rebuild domestic capacity in the near term.
Seas of retaliationAt the heart of the dispute is control over the ocean highways of global commerce. China, over the past decade, has quietly built a commanding lead in shipbuilding, outpacing South Korea and Japan to control 60% of large vessel production by 2024. The US, by contrast, made just one such ship that year.Trump’s administration, frustrated by years of imbalance, has tried to reverse course.
On Tuesday, it began imposing new port fees on Chinese ships-part of a broader effort to resuscitate a withered US shipbuilding industry. In return, China hit American ships with fees of its own. The fees target any vessel owned, operated, built, or flagged by the opposing country, turning each nation’s ports into tollbooths in a maritime standoff.Both sides have carved out technical exemptions-China, for example, said Chinese-built ships are exempt from its new port levies-but the message is unmistakable.
Trade is no longer safe in open waters.“This tit-for-tat symmetry locks both economies into a spiral of maritime taxation,risking distortions in global freight flows,” Athens-based Xclusiv Shipbrokers told Reuters.Floating tariffs, sinking certaintyAt the same time, Trump has widened his tariff campaign at home. New duties-ranging from 10% on raw wood to 50% on kitchen cabinets-also took effect Tuesday, targeting everything from timber to upholstered furniture.
Trump defended the move under the rarely-invoked Section 232 of the 1962 Trade Expansion Act, which allows tariffs on national security grounds. His logic? Furniture and wood are essential to military infrastructure.As per a NYT report, critics call it a stretch. “If war broke out tomorrow,” wrote Scott Lincicome of the Cato Institute, “there would be zero concern about American ‘dependence’ on foreign lumber.”
He called the idea that tariffs would protect national security “absurd.”Retailers and builders are already feeling the pinch. “Getting manufacturing started in the US isn’t easy,” Ethan Allen CEO Farooq Kathwari, who noted his company has factories in Vermont and North Carolina. “We have all these hurdles,” Kathwari told the NYT.A broader economic risk
- The standoff is playing out just as the IMF nudged up its forecast for US economic growth to 2% in 2025, citing resilient consumer demand and investment in AI infrastructure. Yet even the IMF acknowledged the gains might be short-lived if tariffs escalate. “The tariff shock is here,” said chief economist Pierre-Olivier Gourinchas, “and it is further dimming already weak growth prospects.”
- The agency noted that importers and retailers in the US-not foreign producers-are bearing the brunt of the new duties. And over time, those costs are likely to bleed into consumer prices.
- On Friday, US President Donald Trump threatened to slap 100% tariffs on all Chinese goods by November 1 if Beijing doesn’t relent on rare earth restrictions. Within hours, markets dropped, and Chinese state media accused Washington of "economic coercion."
- Trump took to Truth Social to cool the rhetoric, posting: “Don’t worry about China. It will all be fine!” But behind the scenes, talks between Vice Finance Minister Liao Min and US Treasury officials are ongoing in Washington.
- “China’s door remains open,” the commerce ministry said. “But if the US chooses confrontation, China will see it through to the end.”
Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!! President DJT
Donald Trump on Truth Social
Bottom lineBeijing is matching - and expanding - the fight beyond tariff lines to the docks and drydocks, signaling it will penalize firms that abet US probes while leveraging its shipbuilding heft. Washington is betting vessel fees plus fresh tariffs will tilt orders, revive US yards and pry supply chains from China’s orbit. For now, the world’s freight lanes are the battlefield - and the bill for consumers and companies is mounting.
(With inputs from agencies)
English (US) ·