In a dramatic escalation of the global trade and economic conflict, former President Donald Trump is spearheading a new initiative aimed at curbing China’s near-monopoly in the shipbuilding industry. The administration’s proposal to impose steep levies on Chinese-made container ships arriving at U.S. ports is not only a direct challenge to Beijing’s dominance but also a strategic move to revive domestic shipbuilding and reshape global maritime trade.

A Battle Over the High Seas

Under the new policy framework, Chinese-made vessels could face service fees as high as $1.5 million each time they call at a U.S. port. This move is designed to penalize ocean carriers that rely on Chinese-built ships, thereby forcing a re-evaluation of supply chains and encouraging the shift of shipbuilding activities back to U.S. shores. The policy has found bipartisan support among lawmakers, who view it as a necessary step in addressing what they see as an unfair trade advantage enjoyed by Chinese shipyards.

This new approach builds on investigations initiated during the Biden administration. U.S. Trade Representative Katherine Tai led an inquiry under Section 301 of the 1974 Trade Act, examining China’s financial subsidies, procurement policies, forced technology transfers, and other practices that have allowed Chinese shipbuilders to capture an overwhelming share of the global market. A report released in January 2025 underscored these issues, noting that China’s practices have given its shipbuilding and maritime industry a significant edge over competitors worldwide.

Now, with Trump’s renewed focus on the matter, the stakes are being raised even higher. In a recent speech to Congress, Trump announced plans to establish a new White House office dedicated to shipbuilding, aimed at offering special tax incentives to foster U.S. maritime production. This initiative is part of a broader strategy to counter China’s influence across global economic sectors, especially in industries critical to national security and economic stability.

The Numbers Behind the Strategy

China’s hold on the shipbuilding industry is staggering. According to Veson Nautical data, in 2024 Chinese-built container vessels commanded an 81% market share. In the bulk carrier sector, Chinese ships represent around 75% of the global fleet. The country’s influence extends into specialized markets as well, with a 48% share in the liquified petroleum gas (LPG) carrier market—narrowly edging out South Korea, which holds 46%. Only in the LNG carrier market has South Korea managed to maintain a lead, capturing 62% of that segment compared to China’s 38%.

These figures are underpinned by a series of advantages enjoyed by Chinese shipbuilders. Attractive financing options from Chinese banks, favorable state-backed subsidies, and competitive pricing have all contributed to their rapid expansion over the last five years. As Peter Sand, chief shipping analyst at Xeneta, explains, improved quality and aggressive cost strategies have further elevated China’s position, leaving competitors scrambling to adjust.

The economic implications of such dominance are profound. For instance, VesselBot data revealed that 21% of all U.S. trade imported in 2024 arrived on Chinese-built vessels. Major ocean carriers, such as MSC, which relies on Chinese-made vessels for 24% of its current global fleet—and plans to have 92% of its future vessels built in China—could face fines that might add up to an estimated $20 billion annually across the industry. MSC CEO Soren Toft warned, “If the charges come out in the present form, it’s going to have significant consequences.” Toft further explained that these levies would likely force carriers either to alter their networks and reduce coverage at U.S. ports or pass the extra cost onto consumers, potentially raising shipping costs by $600 to $800 per container.

Repercussions Across the Maritime Landscape

The proposed fines and levies are expected to send shockwaves through the global shipping industry. Ocean carriers including Maersk, CMA CGM, and Hapag Lloyd are already assessing the potential impact. For Chinese-owned operators such as COSCO, the direct penalties could be as steep as $1 million per vessel per U.S. port of call. For non-Chinese carriers that incorporate Chinese-built vessels into their fleets, the maximum fee could rise to $1.5 million for each port call.

These financial penalties are part of a dual strategy: not only to discourage the use of Chinese-made ships but also to stimulate domestic shipbuilding. The U.S. government is pushing for a rebalancing of the maritime sector by introducing measures that would gradually require a larger proportion of U.S. exports to be carried on U.S.-flagged and, eventually, U.S.-built vessels. Initially, only 1% of U.S. exports would be subject to this mandate, but the requirement is expected to ramp up to at least 15% over seven years, with 5% of exports needing to be on U.S.-built vessels.

This policy is designed to protect and nurture the domestic shipbuilding industry—a sector that has long been on the defensive due to fierce global competition and the low production costs offered by Asian shipyards. According to Senator Mark Kelly, who recently visited U.S. shipyards, “China operates 5,500 ocean-going vessels worldwide while the U.S. has under 100. Revitalizing U.S. shipbuilding is not just about economics—it’s a matter of national security.”

The Domestic Shipbuilding Push

The renewed emphasis on U.S. shipbuilding is part of a broader bipartisan effort to rebuild the nation’s maritime capabilities. The proposed Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act is at the forefront of these efforts. This legislation is designed to offer a suite of incentives, including tax credits, grants, and other financial mechanisms, to make domestic shipbuilding competitive with the heavily subsidized operations in China.

The act aims to address several critical issues. One is the chronic underinvestment in U.S. shipyards—a problem that has left the country reliant on foreign-built vessels for both commercial and military applications. The loss of domestic shipbuilding capacity has not only economic implications but also strategic ones, as the U.S. Navy and other defense sectors depend on a robust maritime industrial base for vessels ranging from commercial cargo ships to military sealift ships.

David Kim, CEO of Hanwha Philly Shipyard—a leading U.S. commercial shipyard—stated, “The SHIPS Act will strengthen our maritime industrial base and help ensure that American-built ships can compete globally. It’s an essential step toward modernizing our fleet and maintaining national security.”

Philly Shipyard, which recently expanded its capacity under new ownership by South Korea’s Hanwha Systems, is already a critical supplier for U.S. commercial shipping. For example, Matson Navigation Company signed a major contract with the shipyard in 2022 to build three new 3,600 TEU Aloha Class containerships for approximately $1 billion, highlighting the potential for domestic shipbuilding if supported by the right incentives.

National Security Implications

Beyond the economic considerations, the push to target China-made containerships has significant national security ramifications. The U.S. maritime fleet is divided into several segments: the domestic fleet governed by the Jones Act, the international fleet, and the Military Sealift Command (MSC) fleet. The dominance of Chinese-built vessels in international commerce poses strategic risks, especially if geopolitical tensions escalate.

Senator Kelly, a former Navy officer, pointed out that the decline of U.S. shipbuilding has had adverse effects on national defense capabilities. “The loss of U.S. shipbuilding and shipping has resulted in a reduction in the number of shipyards for not just commercial ships but also warships and military sealift ships for the U.S. Navy,” he remarked. This sentiment is echoed by experts who argue that modernizing and expanding the U.S. maritime fleet is critical for ensuring that the country can effectively support its military operations in times of crisis.

Moreover, the proposed policy could help mitigate the risks associated with heavy reliance on foreign-built vessels. As noted by Arnav Rao, a transportation policy analyst at the Open Markets Institute, current U.S. policies have left the nation vulnerable to disruptions in supply chains and shifts in global trade dynamics. Rao criticized previous decisions that he believes weakened the U.S. industrial base, stating, “The U.S. robbed itself of the ability to modernize domestic steel-making and shipbuilding capabilities, which are crucial for national security.”

Industry Responses and the Road Ahead

The reaction from the global shipping community has been one of cautious concern. MSC’s CEO, Soren Toft, highlighted the enormous potential costs associated with the new levies, estimating that they could amount to over $20 billion annually. Such expenses could force carriers to either reconfigure their networks—potentially reducing service to smaller, peripheral ports—or pass the additional costs onto consumers, leading to higher shipping rates and potentially reduced trade volumes.

Experts also warn that the proposed changes could disrupt the efficiency of U.S. ports, which are already operating below their optimal capacity. “U.S. ports are not functioning 24/7; they’re effectively running at about 60% capacity. Any additional logistical hurdles could lead to significant congestion and misallocation of resources, such as truck and rail chassis,” explained Toft. This, in turn, could have a cascading effect on the broader supply chain, affecting everything from retail prices to manufacturing schedules.

International carriers like Maersk, CMA CGM, and Hapag Lloyd, which have substantial portions of their fleets built in China, are evaluating the potential impact of the proposed levies on their global operations. For instance, Maersk’s fleet currently consists of about 20% Chinese-built vessels, with nearly 80% of its future orders coming from Chinese shipyards. These carriers are now faced with the prospect of either altering their order books or absorbing significant additional costs.

Broader Global Implications

Trump’s policy on Chinese-made containerships is not occurring in isolation—it is part of a larger geopolitical and economic struggle over trade, technology, and industrial policy. As nations around the world grapple with the challenges of globalization, the ability to control critical infrastructure and manufacturing capabilities has become a central theme in international relations.

China’s rapid industrialization over the past few decades has allowed it to dominate numerous sectors, from electronics to automobiles, and now shipbuilding. Its success is largely built on state support, including vast subsidies and preferential financing, which have enabled its shipyards to offer competitive pricing and rapid production turnaround times. However, these very advantages are now coming under scrutiny by U.S. policymakers, who argue that such practices distort global markets and undermine fair competition.

The U.S. move to impose levies on Chinese-made vessels is also seen as a response to broader concerns about China’s economic practices. The ongoing investigation into intellectual property theft, forced technology transfers, and other alleged unfair trade practices has heightened tensions between the two nations. In this context, targeting China’s shipbuilding dominance is as much about protecting American economic interests as it is about countering a strategic competitor on the global stage.

Looking Forward: Policy, Innovation, and Adaptation

The future of the U.S. maritime industry will likely be shaped by how effectively policymakers, industry leaders, and international partners can navigate these turbulent waters. The proposed levies and the broader push to bolster U.S. shipbuilding are part of a larger strategy to rebalance global trade and reassert national control over critical industrial sectors. However, there are significant challenges ahead.

For one, the implementation of these policies will require close coordination between various government agencies, industry stakeholders, and international partners. The upcoming hearing by the House Armed Services Subcommittee on Seapower and Projection Forces, scheduled for March 24, will be a critical forum for debating these issues. Lawmakers will need to balance the short-term disruptions caused by the levies with the long-term benefits of revitalizing domestic shipbuilding.

Moreover, the industry must adapt to a rapidly changing landscape where technological innovation and efficiency are paramount. Investments in new technologies, such as automation, digital supply chain management, and advanced materials, will be essential for U.S. shipyards to compete with their heavily subsidized counterparts in China. Initiatives like the SHIPS for America Act are designed to provide the necessary financial support to modernize domestic facilities and bridge the competitiveness gap.

Another key element is workforce development. Revitalizing the shipbuilding sector will require a skilled labor force adept in modern manufacturing techniques. Programs aimed at training and reskilling workers will be critical to ensuring that the U.S. can meet the demands of a modern, technologically advanced maritime industry.

Conclusion: A High-Stakes Game on the Global Oceans

Trump’s bold initiative to target China-made containerships represents a significant escalation in the ongoing global economic war. By proposing steep levies on Chinese-built vessels, the U.S. government is not only challenging China’s dominance in shipbuilding but also setting the stage for a broader reconfiguration of global maritime trade. The potential financial penalties—estimated to add billions in extra costs annually—could force ocean carriers to rethink their logistics, ultimately affecting global supply chains and consumer prices.

At the same time, the move is a clarion call to reinvigorate U.S. shipbuilding, an industry that has long been eclipsed by its Asian competitors. With bipartisan support for measures like the SHIPS for America Act, policymakers are laying the groundwork for a future where American-built ships play a central role in both commercial and military maritime operations. In an era marked by intense geopolitical rivalry and shifting global trade patterns, controlling critical infrastructure such as shipbuilding is not just an economic issue—it is a matter of national security.

As the international shipping community braces for the ripple effects of these policies, all eyes will be on how the industry adapts. From potential port congestion and increased operational costs to the reconfiguration of global shipping networks, the road ahead is fraught with challenges. Yet, these very challenges may also serve as a catalyst for long-overdue innovation in the U.S. maritime sector.

In the coming months, as hearings, policy debates, and industry adjustments unfold, the true impact of Trump’s initiative will become clearer. For now, the proposal stands as a powerful signal that the U.S. is willing to use its economic might to reshape the rules of global trade—a move that could redefine the future of the oceans and the industries that depend on them.

Ultimately, the global economic war on the oceans is about more than just ships and trade routes. It is a battle for technological supremacy, fair competition, and national security in a world where the stakes have never been higher. As policymakers and industry leaders navigate these uncharted waters, the outcome of this high-stakes game will likely reverberate far beyond the shipping lanes, influencing the global economic order for years to come.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

12th March, 2025