US Takes Actions Against Chinese Shipbuilding -USTR

The United States is intensifying its efforts to counter China’s dominance in the global maritime, logistics, and shipbuilding sectors, a move that could significantly escalate the ongoing trade war between the two economic superpowers.

The United States Trade Representative (USTR) press releases highlight the Trump administration’s aggressive stance, particularly through a Section 301 investigation into China’s practices. However, these actions, while aimed at revitalizing US shipbuilding, risk further straining global trade relations and disrupting supply chains already battered by previous tariff battles.

The Scale of China’s Shipbuilding Dominance

A striking post from the USTR on April 18, 2025, shows the disparity in shipbuilding capacity: “A single Chinese state-owned shipbuilder produced more commercial vessels by tonnage in 2024 than the United States produced since World War II.” This statistic, sourced from the Center for Strategic and International Studies (CSIS), illustrates China’s overwhelming lead in the global shipbuilding industry.

With China accounting for over 50% of global shipbuilding output compared to the US’s meager 0.1%, the USTR argues that China’s state-backed policies have marginalized American capabilities, posing both economic and national security risks.

Globally, over 80% of goods are transported by sea, making control over maritime logistics a critical leverage point in international trade. The USTR warns that without action, “US international trade would be carried out on vessels made in China, financed by state-owned Chinese institutions, and owned by Chinese shipping companies.” This dependency could allow China to influence pricing and availability, potentially holding U.S. trade hostage.

USTR’s Response: Section 301 Investigation and Proposed Actions

To counter this, the USTR has initiated a Section 301 investigation, originally launched in April 2024 under the Biden administration but now being pursued with renewed vigor under President Trump. The investigation targets China’s alleged unfair practices, including subsidies, preferential financing, and intellectual property violations, which have fueled its shipbuilding dominance.

A USTR press release details plans for a public hearing on May 15, 2025, to discuss proposed actions, which could include tariffs, fees on Chinese-built ships docking at U.S. ports, or incentives to bolster domestic shipbuilding.

Another USTR post emphasizes the administration’s intent to reverse this trend: “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.” Proposals include creating a White House office for shipbuilding and offering tax incentives to bring production back to the US These measures aim to rebuild an industry that has dwindled to producing fewer than five commercial ships annually, down from 70 in 1975, while China builds 1,700.

Risks of Escalation in the Trade War

While these actions may bolster US shipbuilding in the long term, they carry significant risks of exacerbating the U.S.-China trade war, with ripple effects across the global economy. Here’s how:

Retaliatory Tariffs and Trade Barriers: China, which controls nearly a fifth of the world’s commercial shipping fleet, could respond with its own tariffs or restrictions on U.S. exports. Previous trade war episodes saw China target American agricultural products, electronics, and consumer goods, hurting farmers and manufacturers. A new round of tit-for-tat measures could further erode bilateral trade, which, despite tensions, still exceeds $700 billion annually.

Supply Chain Disruptions: The global shipping industry is already reeling from recent trade war fallout, with canceled sailings from China and a steep decline in container bookings. Imposing fees on Chinese-built ships—potentially covering 98% of liner vessels calling at US ports could drive up shipping costs and disrupt supply chains. Industries reliant on timely imports, such as apparel, electronics, and furniture, could face shortages and higher prices, ultimately impacting U.S. consumers.

Economic Collateral Damage: While US shipbuilders and workers stand to benefit, other sectors could suffer. The World Shipping Council has warned that steep fines on Chinese vessels could reduce U.S. exports, worsening the trade deficit. American farmers, already grappling with tariff-related losses, and manufacturers dependent on global markets could face significant harm. The interconnected nature of trade means that targeting one sector—shipbuilding—could have cascading effects across the economy.

Global Trade Realignment: US actions could push China to strengthen trade ties with other nations, such as those in Southeast Asia or Europe, further isolating American businesses. Countries like Vietnam, already seeing a surge in freight rates, could capitalize on diverted trade flows. Meanwhile, U.S. allies caught in the crossfire may hesitate to align with American policies, complicating multilateral efforts to address China’s practices.

Balancing National Interests and Global Stability

The Trump administration’s focus on revitalizing US shipbuilding reflects a broader “America First” trade policy aimed at reducing reliance on foreign powers, particularly China. However, the aggressive measures proposed—tariffs, fees, and subsidies mirror the very practices the U.S. accuses China of employing, raising questions about consistency and fairness in global trade rules.

To mitigate escalation, the US could pursue a dual-track approach: combining domestic incentives, such as tax breaks and workforce training, with multilateral negotiations through bodies like the World Trade Organization to address China’s subsidies. This would signal a commitment to fair competition without triggering immediate retaliation.

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