In Depth: U.S. Targets Chinese Shipping to ‘Resurrect’ Domestic Industry

[para. 1][para. 2] U.S. President Donald Trump has proposed tariffs aimed at rejuvenating the American shipbuilding industry, a move expected to significantly impact global shipping, with Chinese firms being the primary target. In a speech, Trump stressed resurrecting the American shipbuilding sector, which might increase logistics costs and cause global supply chain disruption. [para. 3] Following this, the U.S. Trade Representative (USTR) proposed tariffs on Chinese shipping entities, imposing up to $1.5 million per ship for vessels built by Chinese manufacturers. [para. 4][para. 5] Analysts believe these tariffs are essentially a financial burden that would influence the global supply chain, pushing shippers to reduce reliance on Chinese-built vessels on U.S. routes, leading to exorbitant operational costs, especially for companies heavily invested in the China-U.S. shipping corridor.

[para. 6] The proposal is rooted in concerns over China's expanding influence in maritime logistics, as it has a significantly larger presence than the U.S., with more than 5,000 Chinese-flagged ships globally compared to fewer than 100 U.S.-flagged ones. This imbalance highlights the challenges the U.S. faces in maritime dominance. [para. 7][para. 8] Beijing responded critically, arguing that these measures would not rejuvenate U.S. shipbuilding but would rather escalate shipping costs, contribute to U.S. inflation, and hurt American port operators. In response, Trump announced plans to establish a White House office dedicated to shipbuilding, offering tax incentives to further support U.S. shipyards. [para. 9] The proposal will undergo a public comment period and a hearing in March.

[para. 10][para. 11] The impact on Chinese shippers, particularly on state-owned companies like China Cosco Shipping, would be substantial. With 59% of its operational capacity on Chinese-built ships, Cosco could face decreased profitability and might consider shifting its business model, possibly using its Ocean Alliance network, which allows sharing vessels with other global shipping giants. Another workaround for Chinese shippers could involve utilizing ports in Canada or Mexico as transit points to the U.S., though these ports have less cargo handling capacity.

[para. 12][para. 13][para. 14][para. 15] Chinese ships, key players in transporting bulk commodities, would see rising costs if tariffs are enforced. As per Lloyd’s List, Chinese-manufactured vessels account for significant portions of specific maritime markets in the U.S. The USTR further proposed that shippers exceeding a certain percentage of orders from Chinese shipyards be subjected to additional fees. Currently, Chinese shipyards contribute to around 70% of new container ship orders globally.

[para. 16][para. 17][para. 18][para. 20] Regarding the shipbuilding industry, the U.S. has been implementing strategies to reduce its reliance on Chinese vessels. The SHIPS for America Act, introduced under Biden's administration, proposes a "commercial cargo preference" that presses for an increase in the use of U.S.-flagged ships. Despite these pressures, U.S. shipping capabilities are limited compared to the large fleet of Chinese-flagged vessels. Analysts predict that the USTR proposal could alter production, sales, and investment within the Chinese shipbuilding sector, albeit without diminishing China's global standing due to cost advantages and efficiency over U.S. builders.

[para. 19] The cost disparity between U.S.-built and Chinese-built vessels is significant; Chinese shipyards produce ships more quickly and affordably than their American counterparts, maintaining China's leadership in global shipbuilding for 15 consecutive years, emphasized by its "Made in China 2025" initiative. Despite the tariffs, China's longstanding prominence in the industry may continue unabated.