Understanding the impact on COSCO and its reaction on USTR penalty on Chinese ships

Earlier in 2025 USTR (United States Trade Representative) proposed to penalize the ships handled by Chinese company by USD 50 / ton of cargo starting from 14th October 2025, the charges will be per vessel calling USA  ports inspite of multiple calls in USA port. The notice was made available for public on USTR website on 17th April 2025. The above given penalization amount of USD 50 / ton will be increased to USD 140 / ton in coming years.  We have posted a detailed analysis in our earlier blog.

Loss that can be faced by COSCO – With 50 USD / ton the annual penalization amount faced by COSCO would be around USD 1.5 billion, which can increase further with the penalty amount.

Below actions can be taken by COSCO to survive and oppose the penalty at US ports

• Utilize its Ocean Alliance with other lines – CMA CGM, OOCL & Evergreen

• To reshuffle the vessels to avoid its own vessel to touch US ports and utilize its alliance vessels to move to US     ports

• Re route the cargo in the global network

• Accept the penalty and still move with its business

  
  

Impact on COSCO after facing penalty from USTR

Below is the financial details of COSCO for 2024

• Revenue of 33.5 billion USD

• Net profit of 7.75 billion USD

• As per present situation of Ocean Freight reduction for last 13 weeks as per Drewry’s report we expected the profit to reduce further below 6 billion USD annually for 2025.

• Its expected that COSCO line would face a loss of USD 1.5 billion due to USTR proposal which would be approx. 25% or more of the annual net profit.

• COSCO would absorb the loss and still exports cargo to USA to continue its business and managing the find a solution

  
  

Conclusion

China can intervene to support its largest shipping line COSCO. Earlier, USA reduced the tariff to 30% for most of Chinese imports.