The U.S. is the world’s largest importer. One would think there would be a market to build the ocean-going vessels coming in from Asia and Europe every day. But when the dollar goes farther in Asia, it is harder to convince the big, global shippers – of which many of them are Asian – to spend it on an American ship.
By comparison, China is the world’s biggest exporter. Cosco Shipping is one of the largest ocean-going freight shippers. It’s China based. Their ships are nearly all made in China.
To solve America’s shipbuilding crisis, Congress and the Trump administration must implement bold, long-term policies that counter Asian rivals and rebuild domestic capacity, CPA’s Senior Economist Mihir Torsekar wrote in a report titled “How to Solve America’s Shipbuilding Crisis” published in October. The USTR’s recent Section 301 report concluded that China’s maritime dominance is “the greatest barrier” to revitalizing U.S. shipbuilding. Fortunately, there are concrete proposals to boost U.S. industry.
The Trump administration can take action without Congress, Torsekar said.
The Jones Act has been a cornerstone of the domestic shipbuilding base since its inception in 1920 as it requires that ships transporting goods between U.S. ports be American-made, owned, and crewed. This law can be strengthened by limiting the use of waivers that allow foreign-built or foreign-crewed ships to transport goods domestically.
“Enforcing the Jones Act is also critical and would ensure that loopholes or misinterpretations do not reduce demand for U.S.-flagged vessels in areas such as liquid natural gas transport and offshore wind development,” Torsekar said. “Domestic commerce should support U.S. shipyards and workers. That will sustain the demand signal to investors and shipyards while protecting American maritime workers at the same time.”
Lastly, Sen. Sullivan was alone in calling out Wall Street’s investment in Asian shipbuilders. He did not name any particular companies.
“We have a provision in this year’s NDAA that requires transparency for China investment,” he said about this year’s upcoming reauthorization of the National Defense Authorization Act for Fiscal Year 2026. “If you are investing in shipbuilding…we want to know about it,” Sullivan said.
Vanguard and BlackRock funds have small positions in China shipbuilders, such as CSSC Holdings in Shanghai, based on Morningstar fund data.
Mercogliano (Campbell University professor) could not name any serious U.S. investments in Chinese rivals but did note how an Italian company helped finance China’s first cruise liner “that will be direct competition to European cruise ships,” he said.
“We have to get Wall Street used to the idea of not financing our rivals,” Sullivan said. “I think they are catching onto that.”
At Senate Commerce, Bipartisan Support for Shipbuilding Industry. So What is Congress Waiting For?
There are very few things that Democrats and Republicans agree on. One of them is the need to support domestic shipbuilding beyond just military vessels. We need cargo ships. We need tugboats and LNG tankers and ice breakers for the frozen Great Lakes and the Arctic. Both sides of the aisle want those things built here. Congress has ready-made legislation to make it happen in the SHIPS Act, a bill CPA supports. Judging by Tuesday’s Senate Commerce Subcommittee hearing, Democrats and Republicans support the bill. Some Senators are asking: what are we waiting for?
“The challenge we face today is real, urgent and daunting,” said Sen. Dan Sullivan (R-AK), chairman of the Subcommittee on Coast Guard, Maritime and Fisheries in the Oct. 28 hearing titled Sea Change: Reviving Commercial Shipbuilding. “We build less than one percent of the world’s commercial ships while China accounts for nearly half of global production,” he said. Like so many other big business issues, China was the motivating factor to get Congress behind incentives for investing in and protecting U.S. shipbuilding.
Deadlines for getting something done on this issue are approaching. The President is facing criticism from his base and independents about focusing too much on foreign policy matters. And while many might forget Trump’s trade agenda is a domestic agenda, delivering the goods on American shipyards and the labor force around it immediately changes the narrative of Trump looking outward instead of at home.
The Fourth Maritime Action Plan is due out next month. This deadline comes from Trump’s April 9 Executive Order requiring a comprehensive action plan within 210 days. The plan, coordinated by the Assistant to the President for National Security Affairs and multiple executive departments, is supposed to address our shipbuilding short-comings (which are vast), maritime workforce development, vessel procurement by the government, deregulation, arctic waterway security, and investment incentives.
The SHIPS Act was written in 2024. The bill establishes a 33% investment tax credit for any investment made by a taxpayer to construct, repower, or reconstruct an eligible oceangoing vessel in the United States, plus a 25% investment tax credit for any investment made by a taxpayer into a qualified shipyard facility in the United States.
Authors of the bill, Sen. Todd Young (R-IN) and Sen. Mark Kelly (D-AZ) wrote a letter to the editor in the Wall Street Journal this week saying that the SHIPS Act should be the first bill the government passes whenever it re-opens.
At the hearing, Sullivan said Washington had the private sector, Trump, and both political parties on board already.
Opposition was non-existent.
Sen. Lisa Blunt Rochester (D-DE) was the only member to criticize the tariff policy, saying “Tariffs on steel and lumber don’t help our shipbuilders.” But she was the only person to complain about that, suggesting most members understand the need for incentives and protection if the U.S. is going to be a commercial maritime power. The world’s commercial shipbuilding leaders are all Asians, led by China and followed by Japan and South Korea.
Earlier this year, the USTR launched a Section 301 investigation into China shipbuilding. CPA supported this investigation and called for fees on China flagged vessels as a way to begin creating demand signals for American-made ships. After that investigation, the Trump administration imposed fines of roughly $50 per ton beginning in October. The fees are to increase annually until reaching $140 per net ton by April 2028.
Testimonials on Revitalizing American Shipyards
Everyone said the government has a role to play. They were mostly concerned about where demand for U.S. made tankers and container ships would come from. This demand signal can come from government procurement – as recently happened in the Big Beautiful Bill’s funding of roughly $9 billion in new Coast Guard ships – but it also needs to come from the private sector.
Industrial policies can help. The Inflation Reduction Act helped spur new solar manufacturing investments, and the CHIPS & Sciences Act led to new investments in semiconductor fabs.
Matt Paxton, President, Shipbuilders Council of America: “Domestic shipbuilding is not a preference, it is a necessity to preserve the capacity we may need in times of conflict. U.S. shipbuilders do not compete on a global level playing field. It is a market that is pervasive with non-market policies.” [Testimony]
Jeff Vogel, Vice President of Legal at Shipbuilder TOTE Services: “There’s an urgent need to rebuild American shipbuilding industries. Shipbuilding is the backbone of our economic security, but we face a stark reality…we produced 0.1% of the world’s commercial vessels last year and China produced over half of the global fleet. This disparity is the direct result of foreign market manipulation and failure of legislation here at home to protect this market. To truly restore our shipbuilding strength, we need decisive action and a demand signal for U.S. made ships.” [Testimony]
Salvatore Mercogliano, Professor, Campbell University (Runs a YouTube Channel: “What’s Going on With Shipping”) “We need to go from a Naval shipping power to a commercial maritime power now, and we are not that. SHIPS Act is long overdue legislation.” [Testimony]
The history of “what went wrong” is well known.
Shipyards survived by building an abundance of military vessels. Then the Cold War ended. The Reagan government ended government programs to help shipbuilders and less government procurement tanked the market. American multinationals began to outsource more low-end labor to Asia and Asian shipbuilders ramped up to ship those goods on their own ships. Then more trade went to Asia, which created the demand signal for them to build more ships and containers. When China joined the World Trade Organization in 2001 and became America’s go-to manufacturer, China copied Japan and South Korean shipyards, and now China is taking market share from them. Asia had long taken that market from us.
Korea Investing in U.S. Shipyards
In January, Trump floated the possibility of more shipbuilding in an interview with Hugh Hewitt, the conservative radio talk show host. “We don’t build ships anymore,” Trump said. “We want to get that started. And maybe we’ll use allies, also, in terms of building ships. We might have to.”
Without any major legislation, South Korea’s Hanwha Ocean committed $5 billion to expand the Hanwha Philly Shipyard, boosting output from fewer than two ships a year to as many as 20. Hanwha placed an order for 10 tankers to be built at the yard, and the workforce is projected to grow to about 5,000.
Sen. Ted Cruz (R-TX) asked what was needed to reinvigorate shipbuilding.
Paxton said shipbuilders needed a sustainable demand signal. Port fees against China ships isn’t enticing by itself.
“If we are serious about owning our own global logistics…well, being dependent on three foreign shipping companies is a liability. We should own our global logistics to a certain extent,” Paxton said. “There is a lot of capital sitting on the sidelines. If the demand signal is there, the money will come.”
Cruz never mentioned the SHIPS Act. He voted against the CHIPS Act. He is part of a contingency of Republicans that tend to be against government programs that look like subsidies, even if that just means tax breaks as opposed to direct payments.
The SHIPS Act has high hurdles due to the government’s already high spending, and the Trump administration’s goal to lower the nearly $2 trillion fiscal deficit.
Nevertheless, in light of the current divisions in Congress, enacting a bill that earns bipartisan backing would help dispel the image of a perpetually fractured government and soften the impression of Trump’s recent outward posture. Two sides get a win. Three, if you count shipbuilders and their labor force.
CPA Weighs Anchor on Commercial Ships
The U.S. is the world’s largest importer. One would think there would be a market to build the ocean-going vessels coming in from Asia and Europe every day. But when the dollar goes farther in Asia, it is harder to convince the big, global shippers – of which many of them are Asian – to spend it on an American ship.
By comparison, China is the world’s biggest exporter. Cosco Shipping is one of the largest ocean-going freight shippers. It’s China based. Their ships are nearly all made in China.
To solve America’s shipbuilding crisis, Congress and the Trump administration must implement bold, long-term policies that counter Asian rivals and rebuild domestic capacity, CPA’s Senior Economist Mihir Torsekar wrote in a report titled “How to Solve America’s Shipbuilding Crisis” published in October. The USTR’s recent Section 301 report concluded that China’s maritime dominance is “the greatest barrier” to revitalizing U.S. shipbuilding. Fortunately, there are concrete proposals to boost U.S. industry.
The Trump administration can take action without Congress, Torsekar said.
The Jones Act has been a cornerstone of the domestic shipbuilding base since its inception in 1920 as it requires that ships transporting goods between U.S. ports be American-made, owned, and crewed. This law can be strengthened by limiting the use of waivers that allow foreign-built or foreign-crewed ships to transport goods domestically.
“Enforcing the Jones Act is also critical and would ensure that loopholes or misinterpretations do not reduce demand for U.S.-flagged vessels in areas such as liquid natural gas transport and offshore wind development,” Torsekar said. “Domestic commerce should support U.S. shipyards and workers. That will sustain the demand signal to investors and shipyards while protecting American maritime workers at the same time.”
Lastly, Sen. Sullivan was alone in calling out Wall Street’s investment in Asian shipbuilders. He did not name any particular companies.
“We have a provision in this year’s NDAA that requires transparency for China investment,” he said about this year’s upcoming reauthorization of the National Defense Authorization Act for Fiscal Year 2026. “If you are investing in shipbuilding…we want to know about it,” Sullivan said.
Vanguard and BlackRock funds have small positions in China shipbuilders, such as CSSC Holdings in Shanghai, based on Morningstar fund data.
Mercogliano (Campbell University professor) could not name any serious U.S. investments in Chinese rivals but did note how an Italian company helped finance China’s first cruise liner “that will be direct competition to European cruise ships,” he said.
“We have to get Wall Street used to the idea of not financing our rivals,” Sullivan said. “I think they are catching onto that.”
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