The U.S. is theworld’s No. 1 exporter of liquefied natural gas. It has two new LNG tankers under construction, or under firm order, in the Philadelphia Shipyard. The builder is Hanwha Ocean, a South Korean shipbuilder. No U.S. company has built an LNG tankersince 1980 – that’s the Virginia-based General Dynamics built LNG tanker named “Abuja.” For this reason, the House Foreign Affairs Committee seems committed to counting on Japan and South Korea to help the U.S. rebuild a shipping industry long lost to Asia a generation ago.
The Committeehearing on shipbuilding took place on July 22. Like everything else tied to global trade, China competition was the impetus to building a shipbuilding and modern port infrastructure industry domestically.
“If we want to restore balance to the oceans, we need to look to our greatest advantage: our international allies and partners,” said Committee Chairwoman Young Kim (R-CA-40). “We must forge an aggressive shipbuilding alliance with South Korea and Japan. By integrating our industrial capacities we can create a counterweight that Beijing cannot match,” she said.
Rep. Brad Sherman (D-CA-32) noted that working with Japan and South Korea to build new ships was fine, but we needed more than ships and had to think hard about whether U.S. companies want to be in this market at this point.
“If you want to revitalize this sector, you have to invest in so much – you have to invest in the domestic supply chain for parts used to build the ships so we are not only importing and doing final assembly,”Rep. Sherman said.“We need countless number of products made here, from engines and cables to coatings. We need to reverse this trend of offshoring and oppose any proposal that makes it easier to move domestic shipbuilding and even ship repair overseas.”
WitnessJ. James Kim, Program Director for the Korea Program at the Henry L. Stimson Center said that “any cooperation with Japan and South Korea should have as its objective deeper investment at home.”
Japan’s Prime Minister Sanae Takaichi has made shipbuilding central to Japan’s economic security agenda. The U.S. and Japan signed a formalMemorandum of Cooperation in October 2025, further entrenching the concept of a tripartite of allied maritime manufacturers. But James Kim warned that Japan’s $550 billion investment pledge into actual maritime allocation “remains unresolved” as of late July.
Based on the hearing itself, shipbuilding is clearly a bipartisan issue. There was no pushback from one party against the next.
The ‘One Big Beautiful Bill Act’ included historic levels of funding for new Coast Guard ships – $25 billion to build 17 ice breakers and 21 cutters, or search and rescue ships. The majority of Coast Guard cutters are built in U.S. shipyards, namely along the Gulf Coast.
But believe it or not, U.S. companies and U.S. government buyers do use Chinese shipyards in some (many) cases. The pattern is most common in the broader commercial market for ocean-going vessels opposed to ships used for domestic waterways, due toJones Act legislation. The Jones Act – which unfortunately was not discussed in the hearing – is a 1920 federal law requiring all cargo transported between U.S. ports be carried on ships that are U.S.-flagged and U.S.-built, and also mostly owned and crewed by Americans. The Act was put on temporary pause by the Trump administration – first for 60 days, and then extended for another 90 days, and now ending Aug. 16 – in March, after they cited attempts to lower costs by increasing ship supply options. These waivers largely stemmed from growing price concerns due to the ongoing conflict with Iran.
China Taking On South Korea and Japan
China is thedominant global shipbuilder, and even major non-U.S. shipbuilding nations have sometimes outsourced production to Chinese yards because of capacity and cost. They control over 50 percent of global commercial shipbuilding capacity at their shipyards. Meanwhile, the United States accounts for less than one-tenth of one percent, according to Chairwoman Kim. She said domestic shipyards were “backlogged, understaffed and structurally-fragile,” suggesting again that the domestic industry was not up to the task of building out anytime soon. The Committee signaled that they believe it when witnesses all agreed that domestic shipbuilding is in generational repair-mode.
The United States remains the world’s largest economy but accounts for roughly 0.04% of global commercial shipbuilding output, while China, Japan, and South Korea together account for approximately 95%.
With China being a key reason for the hearing, Matthew Funaiole, Vice President at the Center for Strategic and International Studies (CSIS), said Western maritime shipping firms rely on China for ships, and that up to 75 percent of the ships made in China are built at shipyards are owned by the China State Shipbuilding Corporation (CSSC) and its subsidiaries. Those ships are destined for markets outside of China, many of which are U.S. allies and partners both in Europe and Asia.
CSSC appears on U.S. government restriction lists, including the Pentagon’s Chinese military company list, which bars defense contractors from using them if working on a military contract.
Funaiole did not say if private U.S. companies were buyers, but he did provide some scope to the problem.
China is pouring “billions of dollars into dual-use shipyards,” he said – meaning a shipyard can be used to make a container ship and also a navy war ship. Same staff. Often the same company, or subsidiary. This makes it extremely hard to track successfully because China is notorious (and skilled at) for changing company names and addresses to avoid the eyes of Washington.
Foreign technology is flowing to these Chinese dual-use shipyards, and that collectively is helping to strengthen its maritime industrial base. CSSC is the star of that show, Funaiole said. “They build more commercial vessels by tonnage each year than the entire U.S. shipbuilding industry has produced since the end of World War II.” Truly a shocking statement to consider.
Committee members touted two bills to help the industry – Sen. Mark Kelly’s (D-AZ)SHIPS Act and Congresswoman Kim’sFLEETS Now Act. Her bill creates a maritime group of nations and has provisions to increase training for American shipbuilders.
A provision in the SHIPS Act was recently added to the House version of the National Defense Authorization Act (NDAA) for Fiscal Year 2027, but that targets war ships, not commercial vessels used for trade. TheSHIPS Act provision would bar funds from being used for a contract to procure a battle force ship built in a foreign yard, and it was paired with funding for an additional DDG-51 destroyer expected to support Bath Iron Works.
Military ships are usually higher value and more complex, but in sheer numbers and total global shipbuilding activity, commercial vessels dominate.
What Will Become of Section 301 Tariff Pause?
In April 2025, the USTR finalized the Section 301 maritime action, imposing port fees on Chinese-built ships and Chinese-owned and operated ships. Duties were imposed on October 14, 2025. For a 50,000 net-ton vessel, the initial fee would have been asteep $2.5 million per U.S. voyage.
But on November 10, 2025, following a Trump-Xi meeting near the APEC Summit in Busan, South Korea, the Trump administration suspended those fees for one year ending November 9, 2026. The White House did not repeal the initial 301 action, so in theory if no further comments are made between now and November, the suspension expires and the Section 301 maritime fees will begin at that time.
In June 2026, U.S. Senators Mark Kelly and Elizabeth Warren (D-MA) publicly called on USTR Amb. Jamieson Greer to reinstate the port fees on Chinese vessels.
Rep. Young Kim asked witnesses about “targeted tariffs,” presumably referring to the 301s against China ships.
Heritage Foundation Senior Fellow, Brent Sadler, told her that fees and tariffs were tools “that could be used” against China. Regarding CSSC, Sadler added that their entity list position needed to “be constantly monitored,” suggesting he is not sure that such an action was being taken at this time.
Funaiole said Washington needed better intelligence on China from a China subsidiary mapping perspective.
“Any effort to try and shift the market needs to be paired with building-up capacity,” he said. “If fees and tariffs are implemented and there is not an increase in capacity outside of China, you’re going to see increasing costs.”
Can the U.S. Still Build Ships?
Hanwha Ocean’s Philly Shipyard is actively building ships today for commercial use by American and foreign companies. It’s possible. The House Foreign Affairs Committee wants more of that.
Sadler called Hanwha’s Philly shipyard investment an anomaly.
“The key thing to watch now is what orders do they get for tankers. And in the current budget that was proposed by the administration, there’s CONSOL tankers (at-sea refueling ships), and there are oilers. How many of these civilian ships, that preferably are going to be built in a U.S. shipyard, will go to Hanwha? They are well positioned to do it. That’ll be a proof [point] that the (re-industrialization) concept and the capex investment was worth it.”
J. Kim noted deals to build ice breakers with Canada and Norway under the 2024 ICE Pact and warned that agreements that do not help U.S. shipyards build capacity and expand shipbuilding labor will fail, if the long-term goal is a bigger domestic footprint.
“Ultimately, you want to transition to where the build out happens from start to finish at a domestic yard, by American workers,” he said.
Nearly four out of every five Jones Act-eligible oceangoing vessels are either tankers or container ships. The fleet includes only nine general-cargo or vehicle-carrier vessels and no dry-bulk ships.
That is an astonishingly small fleet for a country with 95,000 miles of coastline, the world’s largest economy, and enormous domestic waterborne trade potential. The low number compares to hundreds of similar ships in Japan and South Korea, and over 1,500 in China. The low number, including in LNG carriers – a market where the U.S. is a dominant player – helps explain why discussions around the Section 301 maritime fees and the SHIPS Act are so significant. The U.S. is starting at or near ground zero compared to Asian partners, and is in the minor leagues compared to China – not in shipbuilding innovation, know-how, or talent – but in capacity and annual output.
Funaiole noted that another way China can build so much so fast – lower cost energy.
“It’s something we don’t often talk about when we think about industrial capacity, but China heavily subsidizes energy into its shipyards, which means that those shipyards’ fixed costs are way, way lower than they would be here, or even in South Korea and Japan,” he said, recommending to the Committee to begin thinking about “the entire ecosystem of shipbuilding and maritime economics and what you want to do from the U.S. perspective. It’s not just the labor force we lack. It’s not just the cost per vessel where we are priced-out. It’s what those inputs to build look like, and how do you ensure that you can remain competitive.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
House Foreign Affairs Committee Ropes In Japan, South Korea as Solution to U.S. Shipbuilding Woes
The U.S. is the world’s No. 1 exporter of liquefied natural gas. It has two new LNG tankers under construction, or under firm order, in the Philadelphia Shipyard. The builder is Hanwha Ocean, a South Korean shipbuilder. No U.S. company has built an LNG tanker since 1980 – that’s the Virginia-based General Dynamics built LNG tanker named “Abuja.” For this reason, the House Foreign Affairs Committee seems committed to counting on Japan and South Korea to help the U.S. rebuild a shipping industry long lost to Asia a generation ago.
The Committee hearing on shipbuilding took place on July 22. Like everything else tied to global trade, China competition was the impetus to building a shipbuilding and modern port infrastructure industry domestically.
“If we want to restore balance to the oceans, we need to look to our greatest advantage: our international allies and partners,” said Committee Chairwoman Young Kim (R-CA-40). “We must forge an aggressive shipbuilding alliance with South Korea and Japan. By integrating our industrial capacities we can create a counterweight that Beijing cannot match,” she said.
Rep. Brad Sherman (D-CA-32) noted that working with Japan and South Korea to build new ships was fine, but we needed more than ships and had to think hard about whether U.S. companies want to be in this market at this point.
“If you want to revitalize this sector, you have to invest in so much – you have to invest in the domestic supply chain for parts used to build the ships so we are not only importing and doing final assembly,” Rep. Sherman said. “We need countless number of products made here, from engines and cables to coatings. We need to reverse this trend of offshoring and oppose any proposal that makes it easier to move domestic shipbuilding and even ship repair overseas.”
Witness J. James Kim, Program Director for the Korea Program at the Henry L. Stimson Center said that “any cooperation with Japan and South Korea should have as its objective deeper investment at home.”
Japan’s Prime Minister Sanae Takaichi has made shipbuilding central to Japan’s economic security agenda. The U.S. and Japan signed a formal Memorandum of Cooperation in October 2025, further entrenching the concept of a tripartite of allied maritime manufacturers. But James Kim warned that Japan’s $550 billion investment pledge into actual maritime allocation “remains unresolved” as of late July.
Based on the hearing itself, shipbuilding is clearly a bipartisan issue. There was no pushback from one party against the next.
The ‘One Big Beautiful Bill Act’ included historic levels of funding for new Coast Guard ships – $25 billion to build 17 ice breakers and 21 cutters, or search and rescue ships. The majority of Coast Guard cutters are built in U.S. shipyards, namely along the Gulf Coast.
But believe it or not, U.S. companies and U.S. government buyers do use Chinese shipyards in some (many) cases. The pattern is most common in the broader commercial market for ocean-going vessels opposed to ships used for domestic waterways, due to Jones Act legislation. The Jones Act – which unfortunately was not discussed in the hearing – is a 1920 federal law requiring all cargo transported between U.S. ports be carried on ships that are U.S.-flagged and U.S.-built, and also mostly owned and crewed by Americans. The Act was put on temporary pause by the Trump administration – first for 60 days, and then extended for another 90 days, and now ending Aug. 16 – in March, after they cited attempts to lower costs by increasing ship supply options. These waivers largely stemmed from growing price concerns due to the ongoing conflict with Iran.
China Taking On South Korea and Japan
China is the dominant global shipbuilder, and even major non-U.S. shipbuilding nations have sometimes outsourced production to Chinese yards because of capacity and cost. They control over 50 percent of global commercial shipbuilding capacity at their shipyards. Meanwhile, the United States accounts for less than one-tenth of one percent, according to Chairwoman Kim. She said domestic shipyards were “backlogged, understaffed and structurally-fragile,” suggesting again that the domestic industry was not up to the task of building out anytime soon. The Committee signaled that they believe it when witnesses all agreed that domestic shipbuilding is in generational repair-mode.
The United States remains the world’s largest economy but accounts for roughly 0.04% of global commercial shipbuilding output, while China, Japan, and South Korea together account for approximately 95%.
With China being a key reason for the hearing, Matthew Funaiole, Vice President at the Center for Strategic and International Studies (CSIS), said Western maritime shipping firms rely on China for ships, and that up to 75 percent of the ships made in China are built at shipyards are owned by the China State Shipbuilding Corporation (CSSC) and its subsidiaries. Those ships are destined for markets outside of China, many of which are U.S. allies and partners both in Europe and Asia.
CSSC appears on U.S. government restriction lists, including the Pentagon’s Chinese military company list, which bars defense contractors from using them if working on a military contract.
Funaiole did not say if private U.S. companies were buyers, but he did provide some scope to the problem.
China is pouring “billions of dollars into dual-use shipyards,” he said – meaning a shipyard can be used to make a container ship and also a navy war ship. Same staff. Often the same company, or subsidiary. This makes it extremely hard to track successfully because China is notorious (and skilled at) for changing company names and addresses to avoid the eyes of Washington.
Foreign technology is flowing to these Chinese dual-use shipyards, and that collectively is helping to strengthen its maritime industrial base. CSSC is the star of that show, Funaiole said. “They build more commercial vessels by tonnage each year than the entire U.S. shipbuilding industry has produced since the end of World War II.” Truly a shocking statement to consider.
Committee members touted two bills to help the industry – Sen. Mark Kelly’s (D-AZ) SHIPS Act and Congresswoman Kim’s FLEETS Now Act. Her bill creates a maritime group of nations and has provisions to increase training for American shipbuilders.
A provision in the SHIPS Act was recently added to the House version of the National Defense Authorization Act (NDAA) for Fiscal Year 2027, but that targets war ships, not commercial vessels used for trade. The SHIPS Act provision would bar funds from being used for a contract to procure a battle force ship built in a foreign yard, and it was paired with funding for an additional DDG-51 destroyer expected to support Bath Iron Works.
Military ships are usually higher value and more complex, but in sheer numbers and total global shipbuilding activity, commercial vessels dominate.
What Will Become of Section 301 Tariff Pause?
In April 2025, the USTR finalized the Section 301 maritime action, imposing port fees on Chinese-built ships and Chinese-owned and operated ships. Duties were imposed on October 14, 2025. For a 50,000 net-ton vessel, the initial fee would have been a steep $2.5 million per U.S. voyage.
But on November 10, 2025, following a Trump-Xi meeting near the APEC Summit in Busan, South Korea, the Trump administration suspended those fees for one year ending November 9, 2026. The White House did not repeal the initial 301 action, so in theory if no further comments are made between now and November, the suspension expires and the Section 301 maritime fees will begin at that time.
In June 2026, U.S. Senators Mark Kelly and Elizabeth Warren (D-MA) publicly called on USTR Amb. Jamieson Greer to reinstate the port fees on Chinese vessels.
Rep. Young Kim asked witnesses about “targeted tariffs,” presumably referring to the 301s against China ships.
Heritage Foundation Senior Fellow, Brent Sadler, told her that fees and tariffs were tools “that could be used” against China. Regarding CSSC, Sadler added that their entity list position needed to “be constantly monitored,” suggesting he is not sure that such an action was being taken at this time.
Funaiole said Washington needed better intelligence on China from a China subsidiary mapping perspective.
“Any effort to try and shift the market needs to be paired with building-up capacity,” he said. “If fees and tariffs are implemented and there is not an increase in capacity outside of China, you’re going to see increasing costs.”
Can the U.S. Still Build Ships?
Hanwha Ocean’s Philly Shipyard is actively building ships today for commercial use by American and foreign companies. It’s possible. The House Foreign Affairs Committee wants more of that.
Sadler called Hanwha’s Philly shipyard investment an anomaly.
“The key thing to watch now is what orders do they get for tankers. And in the current budget that was proposed by the administration, there’s CONSOL tankers (at-sea refueling ships), and there are oilers. How many of these civilian ships, that preferably are going to be built in a U.S. shipyard, will go to Hanwha? They are well positioned to do it. That’ll be a proof [point] that the (re-industrialization) concept and the capex investment was worth it.”
J. Kim noted deals to build ice breakers with Canada and Norway under the 2024 ICE Pact and warned that agreements that do not help U.S. shipyards build capacity and expand shipbuilding labor will fail, if the long-term goal is a bigger domestic footprint.
“Ultimately, you want to transition to where the build out happens from start to finish at a domestic yard, by American workers,” he said.
The U.S. has 92 American-made ships, with a mostly American crew on board, versus 257 ships in 1980.
Nearly four out of every five Jones Act-eligible oceangoing vessels are either tankers or container ships. The fleet includes only nine general-cargo or vehicle-carrier vessels and no dry-bulk ships.
That is an astonishingly small fleet for a country with 95,000 miles of coastline, the world’s largest economy, and enormous domestic waterborne trade potential. The low number compares to hundreds of similar ships in Japan and South Korea, and over 1,500 in China. The low number, including in LNG carriers – a market where the U.S. is a dominant player – helps explain why discussions around the Section 301 maritime fees and the SHIPS Act are so significant. The U.S. is starting at or near ground zero compared to Asian partners, and is in the minor leagues compared to China – not in shipbuilding innovation, know-how, or talent – but in capacity and annual output.
Funaiole noted that another way China can build so much so fast – lower cost energy.
“It’s something we don’t often talk about when we think about industrial capacity, but China heavily subsidizes energy into its shipyards, which means that those shipyards’ fixed costs are way, way lower than they would be here, or even in South Korea and Japan,” he said, recommending to the Committee to begin thinking about “the entire ecosystem of shipbuilding and maritime economics and what you want to do from the U.S. perspective. It’s not just the labor force we lack. It’s not just the cost per vessel where we are priced-out. It’s what those inputs to build look like, and how do you ensure that you can remain competitive.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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