U.S. Targets China’s Shipbuilding Industry in New Trade Crackdown

Strategic Measures Aim to Curb China’s Global Maritime Dominance

The United States has set its sights on China’s booming shipbuilding industry, launching a bold initiative to counter what it perceives as unfair trade practices that have propelled China to the forefront of the global maritime market. This move, spearheaded by the U.S. Trade Representative (USTR), reflects growing concerns over China’s dominance in shipbuilding, logistics, and maritime services, which American officials argue threatens national economic security and undermines domestic industries. By imposing hefty fees on Chinese vessels and promoting the use of American ships for exports, the U.S. aims to reshape the competitive landscape of the global shipbuilding sector, potentially creating lucrative opportunities for allies like South Korea while exposing the vulnerabilities of its own long-declining shipyards.

At the heart of this strategy is a plan to levy substantial port entry fees on Chinese shipping companies and vessels manufactured in China. Under the proposed measures, Chinese ships docking at U.S. ports could face charges of up to $1.5 million per vessel, depending on tonnage and other conditions, or a maximum of $1,000 per ton of cargo capacity. This financial penalty targets not only Chinese shipping firms but also any operator using China built ships, a move designed to discourage reliance on Chinese maritime infrastructure. Alongside this, the USTR has outlined a phased requirement for American exports, mandating that at least 1% of U.S. goods shipped overseas must use American flagged vessels, with this quota rising to 3% after two years, 5% after three, and 15% after seven, ultimately pushing for all U.S. exports to rely on domestic ships. While this policy zeroes in on energy exports like liquefied natural gas (LNG) and crude oil, it signals a broader intent to revive American shipbuilding capabilities.

China’s rise in the shipbuilding world has been nothing short of meteoric, fueled by what the USTR calls a cocktail of government subsidies, forced technology transfers, intellectual property theft, and artificially low labor costs. According to a January 2025 USTR report, China’s share of the global shipbuilding market soared from a modest 5% in 2000 to over 50% by 2023, dwarfing competitors like South Korea (28%) and Japan (15%). In contrast, the U.S., once a titan in this arena, now languishes with less than 1% of the market, producing fewer than five commercial ships annually compared to China’s staggering output of over 1,700. This disparity has alarmed U.S. policymakers, with Secretary of State Marco Rubio warning on Fox News that China’s capacity to outpace American shipbuilding tenfold poses a dire threat to military and economic readiness. The USTR’s actions build on a Biden era investigation launched in January 2025, which concluded that China’s practices have inflicted significant harm on American industries, necessitating urgent countermeasures.

For South Korea, a global leader in shipbuilding innovation, these U.S. policies could translate into a windfall. As fees inflate the cost of operating Chinese vessels, global shipping giants may pivot to Korean and Japanese shipyards to avoid the financial burden. Bloomberg reports suggest that this shift could bolster South Korea’s already robust industry, which has seen renewed interest from firms like Germany’s Hapag Lloyd. The company is reportedly finalizing a $1.2 billion deal with South Korea’s Hanwha Ocean for six LNG dual fuel container ships, bypassing Chinese alternatives. This trend underscores how U.S. trade restrictions on China’s shipbuilding sector might inadvertently hand South Korea a competitive edge, especially as Korean firms like Samsung Heavy Industries and Hanwha Ocean leverage advanced technology and established reputations to capture growing demand.

Yet, the U.S. itself faces a steep uphill battle in reclaiming its shipbuilding prowess. Decades of protectionist laws, notably the 1920 Jones Act, have paradoxically crippled the industry they were meant to shield. By limiting domestic maritime transport to U.S. built ships, the Jones Act ensured a captive market but drove up costs, sidelining American shipyards from international competition. In 1975, the U.S. churned out over 70 vessels annually; today, it struggles to build five, with only 21 active shipyards compared to over 400 at its peak. High labor costs and minimal government support have compounded this decline, leaving the U.S. ranked 19th globally in commercial ship construction. Experts estimate that revitalizing this sector could take decades and billions of dollars, a daunting prospect for a nation whose naval shipbuilding also lags, with delays plaguing projects like the Columbia class submarines and Virginia class attack subs.

The roots of America’s shipbuilding woes trace back to policies like the Jones Act and the Burns Tollefson Amendment, which barred foreign built military ships and components. While intended to safeguard jobs and security, these laws fostered complacency, allowing U.S. shipyards to coast on guaranteed contracts without innovating or scaling to meet global demand. Meanwhile, China capitalized on state driven investments, such as the $1.3 billion expansion of Hengli Shipbuilding’s Dalian facility, a former STX Group site revitalized to produce mega tankers and ultra large container ships. This facility, acquired by Hengli Group in 2022, exemplifies China’s aggressive push, with 30 ships already under construction last year despite its novice status in the industry.

On the legislative front, bipartisan efforts in Congress signal a growing resolve to confront China’s maritime dominance. The SHIPS for America Act, introduced in February 2025 by Senators Mark Kelly and Todd Young, alongside Representatives John Garamendi and Trent Kelly, seeks to incentivize domestic shipbuilding, expand the U.S. flagged merchant fleet, and even allow temporary use of foreign built vessels to bridge gaps. This bill also eyes cooperation with allies like South Korea, hinting at a strategic partnership to bolster maritime capacity in times of conflict. Such moves reflect a broader “big picture” under the Trump administration to dismantle China’s grip on global shipping, as articulated by Rubio and other officials.

China, unsurprisingly, has pushed back hard, labeling the U.S. measures as reckless and self defeating. In a February 2025 statement, China’s Ministry of Commerce urged Washington to abandon its “erroneous actions,” warning of damage to bilateral trade ties. Since March 2024, when the Biden administration kicked off its probe, Beijing has engaged in multiple dialogues with U.S. counterparts, to no avail. The USTR’s proposals, slated for finalization after a March 24, 2025, hearing by the U.S. International Trade Commission (USITC), could escalate tensions further, with analysts fretting over ripple effects on supply chains and inflation. Logistics experts caution that shipping firms might pass added costs onto consumers, potentially hiking prices for goods reliant on maritime transport.

The stakes are high, and the implications vast. For the U.S., this crackdown on China’s shipbuilding industry is a gamble to reclaim lost ground, but its own industrial frailties may undermine the effort. South Korea stands to gain as a key beneficiary, its shipyards poised to fill the void left by sidelined Chinese competitors. Globally, the maritime sector braces for upheaval, with trade dynamics, shipping costs, and geopolitical rivalries hanging in the balance as these policies unfold.