Strengthening Domestic Shipbuilding: A New US Strategy to Counter China’s Maritime Influence

Introduction

The United States is set to introduce a significant policy shift in its approach to the global shipping industry. A draft executive order, currently under consideration by the administration of President Donald Trump, proposes the implementation of fees for docking at US ports. These fees will apply to any vessel that is part of a fleet incorporating Chinese-built or Chinese-flagged ships. This move is aimed at revitalizing the domestic shipbuilding industry and diminishing China’s dominance in the global maritime sector. The initiative reflects a bipartisan consensus among US lawmakers regarding the need to address China’s growing influence over the seas and the declining state of US naval readiness.

China’s Rise in Global Shipbuilding

China’s ascendancy in the shipbuilding industry is a remarkable story of rapid growth and strategic dominance. In 1999, Chinese shipbuilders accounted for a mere five percent of the world’s merchant vessel cargo capacity. Today, that figure has soared to over fifty percent, as reported by the Center for Strategic and International Studies. This dramatic expansion underscores China’s emergence as a global powerhouse in maritime manufacturing. The implications of this growth extend beyond economic metrics, as it positions China as a critical player in the global supply chain and international trade.

However, this rise has not occurred without consequences. The growth of Chinese shipbuilding has come at the expense of other major shipbuilding nations, such as Japan and South Korea. These countries, once dominant in the industry, have seen their market shares erode as Chinese yards have captured an increasingly larger portion of global orders. The decline of these nations’ shipbuilding industries has raised concerns about the concentration of maritime manufacturing capacity in China and the potential vulnerabilities this could create for global trade.

Meanwhile, the US shipbuilding industry has experienced a similar decline. Once a leader in the field during the 1970s, US shipbuilders now produce only a small fraction of the world’s merchant vessels. This decline is not only an economic issue but also a strategic one, as the health of the domestic shipbuilding industry is closely tied to the readiness and capabilities of the US Navy. The ability to design, build, and maintain advanced naval vessels is a cornerstone of US military power, and the atrophy of the domestic shipbuilding base poses long-term risks to national security.

A Rare Bipartisan Consensus: Addressing China’s Maritime Dominance

The issue of China’s growing dominance of the seas and the decline of US naval readiness is one of the few areas where there is bipartisan agreement in Washington. Both Republican and Democratic lawmakers recognize the challenge posed by China’s rising influence in the maritime domain and the need for a comprehensive strategy to address it. This rare consensus underscores the seriousness of the issue and the shared belief that action is necessary to safeguard US interests and global stability.

Lawmakers from both parties have expressed concern about the potential risks associated with China’s dominance of the global shipping industry. These concerns extend beyond economic competition to issues of national security. The concentration of shipbuilding capacity in China raises the possibility that Beijing could exert influence over global trade flows, potentially disrupting the supply chains upon which the US and its allies rely. Moreover, the decline of domestic shipbuilding capacity undermines the ability of the US Navy to maintain its operational readiness and to project power globally.

In this context, the proposed executive order represents a concrete step toward addressing these challenges. By targeting fleets that include Chinese-built or flagged vessels, the policy seeks to create economic incentives for shipping companies to diversify their fleets and reduce their reliance on Chinese shipbuilding. At the same time, the measure aims to support the rejuvenation of the US shipbuilding industry, creating jobs and strengthening the domestic industrial base.

The Proposed Executive Order: Details and Implications

The draft executive order, dated February 27, outlines a new policy framework for regulating the use of US ports. Under the proposed rules, any vessel entering a US port would be subject to fees if it is part of a fleet that includes vessels built or flagged in the People’s Republic of China. This measure would apply regardless of where the specific vessel was built or flagged, meaning that even vessels constructed in other countries could be subject to the fees if they are part of a fleet with Chinese connections.

The proposed policy has significant implications for the global shipping industry. Shipping companies that operate fleets with Chinese-built or flagged vessels would face additional costs when accessing US ports. These costs could potentially be passed on to consumers, leading to higher prices for goods imported into the US. At the same time, the measure could create new opportunities for US shipbuilders, as shipping companies seek to avoid the fees by purchasing vessels from domestic yards.

The executive order also reflects a broader strategy to pressure US allies to adopt similar measures. The draft document suggests that the US will encourage its partners to impose comparable fees on fleets with Chinese connections. Allies that fail to comply could face retaliation, potentially including trade restrictions or other economic penalties. This approach reflects a desire to create a more level playing field for US shipbuilders while also addressing the broader strategic challenge posed by China’s dominance of the global shipping industry.

The Role of Allies and Global Implications

The success of the proposed policy will depend in part on the cooperation of US allies. The draft executive order suggests that the US will seek to persuade its partners to adopt similar measures, creating a united front against China’s growing influence in the maritime domain. However, this approach may face resistance from some allies, particularly those with significant economic ties to China.

The global implications of the proposed policy are far-reaching. By targeting fleets with Chinese connections, the measure has the potential to disrupt global shipping patterns and increase costs for consumers. At the same time, it could lead to a diversification of shipbuilding capacity, as shipping companies seek to reduce their reliance on Chinese yards. The measure could also have broader strategic implications, as it reflects a growing recognition of the need to address China’s dominance of critical industries.

The proposed policy also raises questions about the potential for retaliation from China. Beijing has already demonstrated its willingness to respond to US trade measures with countermeasures of its own. In the event that the US and its allies impose fees on fleets with Chinese connections, China could respond by targeting US exports or imposing its own restrictions on US-flagged vessels. This could lead to a new front in the ongoing trade and economic competition between the two powers.

Conclusion: The Road Ahead for US Shipbuilding and Global Trade

The proposed executive order represents a significant step in the US effort to address the challenge posed by China’s dominance of the global shipping industry. By targeting fleets with Chinese connections, the measure seeks to create economic incentives for the diversification of shipbuilding capacity and the support of domestic industries. At the same time, it reflects a broader recognition of the need to address the strategic implications of China’s growing influence in the maritime domain.

As the US moves forward with this policy, it will be important to carefully consider both the potential benefits and the possible risks. While the measure could help to rejuvenate the domestic shipbuilding industry and reduce reliance on Chinese-built vessels, it could also lead to higher costs for consumers and potential retaliation from China. The cooperation of US allies will be crucial in determining the success of the initiative, as will the ability to navigate the complex web of global trade relationships.

In conclusion, the proposed executive order reflects a new era of US policy aimed at countering China’s growing influence in the maritime domain. Whether this approach succeeds in achieving its goals will depend on a variety of factors, including the response of the global shipping industry, the cooperation of US allies, and the broader dynamics of US-China relations. As the situation continues to evolve, it will be important to monitor the impact of this policy and its implications for the future of global trade and security.