[1]60 Minutes, CBS News, “Collapse of U.S. shipbuilding poses national and economic security risks,” March 2026.
[2]Mihir Torsekar, “How to Solve America’s Shipbuilding Crisis,” CPA Economics Report, October 2025.
[3] Biddle, “Does America Face,” March 19, 2025.
[4]de Soyres, François, Ece Fisgin, Mike Liu, and Eva Van Leemput. “China’s Trade Dominance and the Role of Industrial Policies.” FEDS Notes, Board of Governors of the Federal Reserve System, March 23, 2026.
[5]USTR estimate ($91 billion, 2006-2013); Center for Strategic and International Studies estimate ($132 billion, 2010-2018).
[6]CPA Economics Report, October 2025; USTR, Financial Times, Baker Institute data.
[7]CSIS data on Chinese warship fleet, 2003-2023; CPA Economics Report.
[8]Biddle, “Does America Face,” March 19, 2025.
[9]Mary Bridges, “Liberty Yards: The Case for Public Shipbuilding,” Vanderbilt Policy Accelerator, January 2026.
[10]Rana Foroohar, “War with Iran has exposed American fragility at sea,” Financial Times, March 22, 2026.
[11]OECD, “Global Value Chains and the Shipbuilding Industry,” OECD Science, Technology and Industry Working Papers, 2019.
[12] Congressional Budget Office, “The Shipbuilding Composite Index and Its Rates of Change Compared With Economywide Inflation Rates,” 2023.
[13] Nucor Plate Mill Group Capabilities, 2025; SSAB ABS Steel Grades; Metals USA ABS-grade specifications.
[14]Liberty Yards report; Josh Luckenbaugh, “Navy, Industry Try to Reverse Course on Workforce Woes,” National Defense, March 2025.
[15]Mihir Torsekar, “New Fed Research Backs CPA’s Case on China’s Industrial Policy and Record Surplus,” Coalition for a Prosperous America, March 26, 2026; National Bureau of Statistics of China, “Industrial Capacity Utilization,” Q4 2025.
[17]Mary Bridges, “Liberty Yards: The Case for Public Shipbuilding,” Vanderbilt Policy Accelerator, January 202
60 Minutes Shows America the Plan to Let China Win in Shipbuilding
KEY POINTS
A recent 60 Minutes segment on America’s shipbuilding crisis highlighted the views of the Cato Institute.[1] The principal arguments were that the Jones Act creates absurd economic outcomes, that domestic shipbuilding costs four times what Asian yards charge and that steel tariffs are a self-inflicted wound on the very industry the administration wants to revive.
The punchline? The administration is “fighting its own policy.”
The segment’s editorial framing reinforced this view, presenting the gap between American and Asian shipbuilding costs as evidence that protectionist policy has failed.
The Free-Market Failure that Got Us Here
The Cato Institute’s critique rests on a familiar premise: protectionist industrial policy is what ails American shipbuilding, and the cure is more market discipline. But this experiment has already been conducted. The results are unambiguous.
By the early 1980s, global shipbuilding was shifting toward Asia as South Korea and Japan scaled their state-backed yards. The Reagan Administration looked at the Construction Differential Subsidy — the federal program that compensated U.S. shipyards for the cost gap between domestic and foreign-built vessels — and made a judgment that should sound familiar: the math didn’t work. Domestic yards were more expensive than their Asian competitors, the subsidy was costly, and the free-market logic was straightforward. Why pay a premium to build ships in America when they could be built cheaper abroad? Congress eliminated the program in 1982 and never replaced it, thereby removing the primary demand-side mechanism sustaining U.S. commercial shipyards through the postwar decades.
In response, U.S. commercial ship production fell from around 20 large oceangoing vessels per year to just five within eight years (figure 1). America’s share of global commercial tonnage dropped from 1% in 1988 to 0.25% by the end of the 1990s. Roughly 75,000 shipbuilding jobs disappeared.[2] The market didn’t sort it out. It eliminated the industry.
FIGURE 1
South Korea didn’t have a natural comparative advantage in shipbuilding in 1970 — it built that advantage through decades of sustained state investment. Washington made the opposite choice. The crisis 60 Minutes documented is what happens when a country exits an industrial competition and assumes the market will sort it out.
The “Math” Argument Is How China Wins Every Time
The segment’s central claim was that building an LNG carrier in the United States costs approximately $1 billion while the same vessel costs $260 million in South Korea. The implied prescription: rely on allied shipyards and loosen the Jones Act’s domestic-build requirements.
That prescription assumes allied shipyard access is a reliable substitute for domestic capacity. South Korea and Japan are the world’s second and third largest shipbuilders, but both operate within range of Chinese military action and have their own strategic calculus in a U.S.-China confrontation. According to the U.S. Office of Naval Intelligence, China’s shipbuilding capacity exceeds America’s by a factor of more than 200.[3] Outsourcing to allies does not close that gap — it adds strategic dependence on top of the economic dependence the segment’s own reporting documented.
This is the same calculation Americans have been making for two decades, and Beijing has been the beneficiary every time. When the “math didn’t work” for domestic solar panel production, China captured over 80% of the global market. When the “math didn’t work” for battery manufacturing, China seized 75% of global cell production. When the “math didn’t work” for rare earth processing, China locked in 60-70% of global capacity. In each case, the logic was identical: foreign production is cheaper today, so buy foreign. In each case, the result was the same: permanent American dependence on a strategic adversary.
New Federal Reserve research published days before the 60 Minutes segment aired puts hard numbers behind this pattern. A March 2026 FEDS Note examined the relationship between Chinese industrial policy interventions and export growth across manufacturing sectors. The findings are striking: the 15 most policy-targeted sectors accounted for 76% of the increase in China’s aggregate trade surplus from 2017 to 2024.[4] Computing machinery led with 1,038 policy interventions, followed by pharmaceuticals, chemicals, and motor vehicles — precisely the sectors Beijing targeted under Made in China 2025 (figure 2).
FIGURE 2
China’s goods surplus surged to a record $1.2 trillion in 2025, exceeding 1% of world GDP, roughly double the peak surpluses recorded by Japan or Germany as a share of world output. Standard macroeconomic explanations — savings rates, currency dynamics, demographics — do not fully account for why the surplus concentrates so heavily in the sectors where Beijing has intervened most aggressively. The sectoral pattern points to industrial policy as a significant driver.
Shipbuilding fits squarely within this model. China’s shipbuilding costs are low because Beijing directed an estimated $91-132 billion in state subsidies to its yards between 2006 and 2018.[5] Chinese state-owned enterprises hold stakes in at least 96 overseas ports. Chinese manufacturers produce 95% of the world’s shipping containers, 86% of intermodal chassis, and 70% of port cranes (figure 3).[6]
FIGURE 3
In 2019, Beijing merged its two largest state-owned shipbuilders into a single conglomerate with over 300 subsidiaries controlling roughly 20% of global shipbuilding capacity. These yards operate as dual-use facilities under the military-civil fusion doctrine, building commercial vessels and advanced naval warships side by side. China now operates the world’s largest navy, with 234 warships to the U.S. Navy’s 219.[7] The disparity in fleet size understates the structural gap. China’s commercial shipyards could be converted to wartime naval production at a scale the United States has no capacity to match — a reversal of the industrial advantage that allowed American shipyards to outproduce Imperial Japan during World War II.[8]
Repealing the Jones Act Is Not the Answer
The most prominent policy target in the 60 Minutes segment was the Jones Act, the 1920 law requiring vessels transporting goods between U.S. ports to be American-built, American-owned, American-crewed, and American-flagged. The Cato critique framed it as the root cause of absurd cost outcomes, pointing to LNG shipping as the primary example: natural gas produced in Texas must travel thousands of miles by pipeline or be shipped from overseas because there are no Jones Act-compliant LNG carriers available to move it by sea between American ports. The implication is that the Jones Act is blocking straightforward energy cost savings.
That framing captures a real inefficiency. The absence of domestic LNG carriers is a genuine constraint, and the cost penalties for Jones Act-compliant coastwise shipping are measurable. But the prescription — weaken or repeal the Act to access cheaper foreign-built vessels — trades a visible short-term cost for a structural vulnerability that compounds over time. The Jones Act is the single remaining industrial policy instrument that guarantees a domestic market for American-built commercial vessels. Without it, there is no commercial shipbuilding industry in the United States at all. Every other segment of the American shipping market that falls outside the Jones Act’s purview has already migrated to foreign-built, foreign-flagged vessels. The domestic shipbuilding base that remains exists because the Act requires it to exist.
Repealing the Jones Act would deliver a modest reduction in coastwise shipping costs. It would also eliminate the only guaranteed demand signal that U.S. commercial shipyards have. Operators would immediately shift to cheaper foreign-built vessels — vessels that are cheaper precisely because they come from yards backed by the kinds of state subsidies documented above. The Vanderbilt Policy Accelerator’s Liberty Yards report reached the same conclusion: repeal offers a short-term gain while increasing longer-term fragility.[9] Waiving the Jones Act for LNG carriers would shave pennies off energy prices while leaving the structural vulnerability intact.[10] The short-term savings are marginal; the long-term cost is a shipbuilding base that never comes back.
Criticizing the Jones Act for failing to sustain a thriving shipbuilding industry is like blaming the last fire hose for not putting out the blaze. The answer is more hoses, not fewer.
Abandoning the Act because the industry it protects is currently too small and too expensive is the same circular logic that has been applied to every American industry China has captured: the sector is uncompetitive, therefore stop protecting it, therefore it dies, therefore dependence deepens.
Steel Tariffs Protect the Supply Base Shipbuilders Need
The segment argued that steel tariffs undermine shipbuilding by driving up input costs. The framing suggests that steel prices are a primary driver of the cost gap between American and Asian shipyards. They are not. According to OECD analysis of global value chains in shipbuilding, iron and steel accounts for roughly 10% of intermediate input costs in ship production.[11] The actual cost drivers are labor, which represents 40-50% of total construction costs according to the Congressional Budget Office’s shipbuilding composite index, and equipment and outfitting — propulsion systems, electronics, navigation, piping, and electrical systems — which account for 35-57% depending on vessel type.[12] Steel plate is a meaningful input, but it is not the reason American ships cost four times what Korean ships cost. The gap is driven by labor productivity, yard efficiency, and the scale economies that come from sustained production volume.
The domestic capacity to supply shipbuilding-grade steel exists today. For example, U.S. steelmakers produce marine-grade plate, which are used for hulls, decks, and bulkheads — the structural core of every vessel. Nucor, SSAB, and ArcelorMittal together account for roughly 80% of the domestic plate market, with combined annual plate capacity of approximately 3.5 million tons.[13] A large commercial vessel requires roughly 30,000 to 50,000 tons of steel plate. Even if U.S. shipbuilding scaled to 20 large oceangoing vessels per year — four times the current rate — total plate demand would be 600,000 to 1,000,000 tons, well within existing domestic capacity.
The real issue is volume. Steel pricing is a volumetric business. The more orders a shipyard places, the greater its leverage to negotiate fixed-price contracts over extended periods, allowing steelmakers to spread their operating costs across a larger production base and offer more competitive pricing. A shipyard producing two vessels per year has far less purchasing power than one producing twenty. Without a sustained order pipeline, no individual yard can generate sufficient demand to unlock those economies of scale. The answer to high steel costs in shipbuilding is more shipbuilding orders — and the current price premium is a symptom of insufficient demand, not a reason to weaken the tariffs that preserve the domestic supply base.
The Workforce Argument Proves the Case for Industrial Policy
The segment pointed to the Georgia ICE raid on Korean technicians at a battery plant and the administration’s tightening of skilled work visas as evidence that immigration enforcement contradicts the shipbuilding agenda. It reinforced this by profiling the Philadelphia shipyard’s dependence on 50 Korean trainers sent by Hanwha.
The workforce argument actually strengthens the case for sustained industrial policy. The reason American shipyards need Korean trainers is that the U.S. allowed its maritime workforce to atrophy for four decades. When the Construction Differential Subsidy was eliminated and yards closed, the welders, pipefitters, and marine engineers who built ships had nowhere to go. Their skills were not passed on. Shipyard entry-level wages hover around $21 per hour, comparable to retail or fast food, while the work demands extreme physical conditions and technical skill.[14] Workforce attrition is a symptom of the same underlying problem: an industry starved of investment and demand.
To be sure, rebuilding a workforce that took 40 years to hollow out will not happen overnight, and yards scaling up production now do need experienced technical workers. Targeted provisions for training-phase foreign workers — welding instructors, marine engineering supervisors, program managers with experience in modern yard operations — are compatible with a broader immigration enforcement posture. The distinction is between temporary technical transfer and permanent dependence on foreign labor as a substitute for domestic investment. The former accelerates the rebuild; the latter perpetuates the underlying weakness.
The segment’s own reporting showed what the longer-term pipeline looks like. The Philadelphia apprentices it profiled had left jobs at Amazon, bakeries, and nannying for shipyard careers that offered paid training, healthcare, and a sense of purpose. That pipeline does not scale, however, without the sustained demand signals that give shipyards confidence to invest in multi-year training programs. Hanwha’s plan to grow the Philadelphia workforce to 7,000-10,000 workers depends on a guaranteed order book, the kind of demand certainty that only government policy can provide.
The Policies Are Complementary, Not Contradictory
60 Minutes presented the Jones Act and steel tariffs as contradictions in the administration’s shipbuilding agenda. The free-market framing was that each policy individually harms the industry the administration claims to be rebuilding.
These policies serve different functions within a coherent industrial strategy. The Jones Act preserves the domestic market for American-built vessels, without which there would be no commercial shipbuilding industry at all. Steel tariffs protect the upstream supply base that shipbuilders need and occur against the broader backdrop of investing in domestic workforce development.
The real contradiction in U.S. shipbuilding policy is the one 60 Minutes failed to identify: the federal government wants to rebuild the industry but has not provided the sustained demand signals necessary to do so. CPA’s research has documented how China’s overcapacity model operates: aggregate industrial utilization sat at 75% in Q4 2025, industrial inventories reached $2.4 trillion by mid-2025, and only three of China’s 112 electric vehicle manufacturers were turning a profit.[15] Firms continue operating at a loss and exporting the surplus at artificially low prices. The same dynamic applies to shipbuilding, where Chinese state-subsidized yards maintain excess capacity that prices out competitors who lack equivalent government backing.
Washington should strengthen and enforce the Jones Act, establish a Shipbuilding Industrial Fund with tax incentives for yard modernization, expand cargo preference laws to guarantee demand for U.S.-flagged vessels, and impose strategic fees on Chinese maritime assets.[16] These measures should be complemented by investment in publicly owned shipyard capacity, a Maritime Infrastructure Bank, and a Maritime Workforce Reserve.[17]
The 60 Minutes segment asked the right question: can American shipbuilding be saved? The answer is yes. The path runs through more industrial policy, not less. Beijing built its shipbuilding dominance through decades of patient state investment. The United States once held the industrial advantage that China holds today. American shipyards, not superior seamanship, decided the outcome of the Pacific war.
The free-market critique offered on 60 Minutes has been tested repeatedly across solar, batteries, rare earths, and steel; in every case, the result was deeper American dependence on China, not the efficient market outcome its proponents promised. Shipbuilding is too important to run the same experiment again.
FOOTNOTES
[1]60 Minutes, CBS News, “Collapse of U.S. shipbuilding poses national and economic security risks,” March 2026.
[2]Mihir Torsekar, “How to Solve America’s Shipbuilding Crisis,” CPA Economics Report, October 2025.
[3] Biddle, “Does America Face,” March 19, 2025.
[4]de Soyres, François, Ece Fisgin, Mike Liu, and Eva Van Leemput. “China’s Trade Dominance and the Role of Industrial Policies.” FEDS Notes, Board of Governors of the Federal Reserve System, March 23, 2026.
[5]USTR estimate ($91 billion, 2006-2013); Center for Strategic and International Studies estimate ($132 billion, 2010-2018).
[6]CPA Economics Report, October 2025; USTR, Financial Times, Baker Institute data.
[7]CSIS data on Chinese warship fleet, 2003-2023; CPA Economics Report.
[8]Biddle, “Does America Face,” March 19, 2025.
[9]Mary Bridges, “Liberty Yards: The Case for Public Shipbuilding,” Vanderbilt Policy Accelerator, January 2026.
[10]Rana Foroohar, “War with Iran has exposed American fragility at sea,” Financial Times, March 22, 2026.
[11]OECD, “Global Value Chains and the Shipbuilding Industry,” OECD Science, Technology and Industry Working Papers, 2019.
[12] Congressional Budget Office, “The Shipbuilding Composite Index and Its Rates of Change Compared With Economywide Inflation Rates,” 2023.
[13] Nucor Plate Mill Group Capabilities, 2025; SSAB ABS Steel Grades; Metals USA ABS-grade specifications.
[14]Liberty Yards report; Josh Luckenbaugh, “Navy, Industry Try to Reverse Course on Workforce Woes,” National Defense, March 2025.
[15]Mihir Torsekar, “New Fed Research Backs CPA’s Case on China’s Industrial Policy and Record Surplus,” Coalition for a Prosperous America, March 26, 2026; National Bureau of Statistics of China, “Industrial Capacity Utilization,” Q4 2025.
[17]Mary Bridges, “Liberty Yards: The Case for Public Shipbuilding,” Vanderbilt Policy Accelerator, January 202
REFERENCES
Biddle, Stephen, and Eric Labs. “Does America Face a ‘Ship Gap’ With China?” Foreign Affairs, March 19, 2025.
Bridges, Mary. “Liberty Yards: The Case for Public Shipbuilding.” Vanderbilt Policy Accelerator, January 2026.
Congressional Budget Office. “The Shipbuilding Composite Index and Its Rates of Change Compared With Economywide Inflation Rates.” 2023.
CSIS. Data on Chinese warship fleet, 2003–2023.
de Soyres, François, Ece Fisgin, Mike Liu, and Eva Van Leemput. “China’s Trade Dominance and the Role of Industrial Policies.” FEDS Notes, Board of Governors of the Federal Reserve System, March 23, 2026.
Foroohar, Rana. “War with Iran has exposed American fragility at sea.” Financial Times, March 22, 2026.
Luckenbaugh, Josh. “Navy, Industry Try to Reverse Course on Workforce Woes.” National Defense, March 2025.
National Bureau of Statistics of China. “Industrial Capacity Utilization.” Q4 2025.
Nucor Plate Mill Group Capabilities, 2025; SSAB ABS Steel Grades; Metals USA ABS-grade specifications.
OECD. “Global Value Chains and the Shipbuilding Industry.” OECD Science, Technology and Industry Working Papers, 2019.
60 Minutes, CBS News. “Collapse of U.S. shipbuilding poses national and economic security risks.” March 2026.
Torsekar, Mihir. “How to Solve America’s Shipbuilding Crisis.” CPA Economics Report, October 2025.
Torsekar, Mihir. “New Fed Research Backs CPA’s Case on China’s Industrial Policy and Record Surplus.” Coalition for a Prosperous America, March 26, 2026.
USTR estimate ($91 billion, 2006–2013); Center for Strategic and International Studies estimate ($132 billion, 2010–2018).
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