Uncertainty over definition of ‘Chinese-owned vessels’ leads to jitters in ship leasing market, reports Reed Smith

Global sanctions expert Leigh Hansson (pictured), Global Regulatory Enforcement lawyer at Reed Smith, comments as follows on the potential impact of U.S. tariffs on the shipping industry – particularly regarding ownership, leasing and financing of vessels – as well as the steps being considered to mitigate risk.

“With the U.S. preparing to impose new tariffs that will impact the global shipping market, we’ve received a number of queries from shipping clients about what constitutes 'Chinese-owned' and how this may impact the leasing market. 

"Uncertainty remains over how ‘Chinese ownership’ will be defined — creating major concerns for owners, operators, and financiers. Take a Greek shipowner entering a sale and leaseback with a Chinese lessor: if the owner is seen as controlled by a Chinese entity, they could face the higher tariff. Given the billions of dollars’ worth of vessels linked to Chinese interests, the impact could be significant.

“Clients are looking for ways to map their risk now rather than wait for enforcement. Some are already considering restructuring options to minimise their exposure to potential tariffs tied to Chinese control.

“We are seeing increased demand for contractual protections, adjusted insurance terms, and clearer disclosures around beneficial ownership and financing sources. Clients want to future-proof their deals against regulatory surprises.

“Shipowners need to assume a cautious approach — if there’s any material Chinese control in a vessel’s structure, depending on what is introduced in May, it could trigger new tariffs. Until regulators give clearer definitions, the industry is operating in a zone of uncertainty.”