Since the first term of Donald Trump, the U.S. has aimed to limit China’s economic dominance, particularly in shipbuilding. However, a recent initiative to counter this trend, which includes significant state-backed subsidies, is rooted in a proposal from five U.S. labor unions during Joe Biden’s administration, rather than Trump’s policies.
In February, the U.S. Trade Representative (USTR) introduced a plan for a fee of $1.5 million on Chinese-made ships docking at U.S. ports, citing unfair advantages China enjoys in the shipbuilding sector. The rationale behind this fee is to protect U.S. commerce, potentially costing Chinese-operated vessels up to $1 million and Chinese-built ships up to $1.5 million.
China has emerged as the world leader in ship production over the past three decades, surpassing 50% market share in 2023, up from just 5% in 1999. The Chinese government has heavily subsidized this industry, effectively hindering foreign competition. Some analysts, like Albert Veenstra from Erasmus University, argue this narrative of China undermining the U.S. shipbuilding industry is flawed. The decline of U.S. shipbuilding stems from historical shifts in priorities after World War II, not solely from competition with China.
Peter Sand from shipping analytics firm Xeneta remarked that efforts to challenge China’s dominance seem belated and align with Trump-era policies aimed at limiting Chinese influence. Past U.S. measures included significant tariff increases on Chinese goods and potential tariffs on steel and aluminum imports.
The proposed docking fees could raise shipping costs dramatically, with implications for the U.S. economy. If implemented, the cost for a thousand containers could increase by $1,000 each due to added docking charges, ultimately affecting consumer purchasing power. Analysts estimate that the fees could yield between $40 and $52 billion annually for the U.S. if no changes occur in shipping practices.
Some shipping firms are considering alternatives to avoid U.S. ports, such as rerouting shipments through Mexico or Canada or changing fleet strategies to bypass charges linked to Chinese-made components. Legal concerns surrounding the fee’s compliance with international trade agreements may also arise, as such measures might provoke challenges from major trading partners.
Furthermore, experts doubt this initiative will significantly revive U.S. shipbuilding, which has plummeted to fewer than five new vessels annually. Veenstra noted that the current shipbuilding capacity in the U.S. and Europe is insufficient, further complicating the situation. The USTR’s proposal, nested within the broader “America First” agenda, poses risks for global trade and supply chains.
In summary, the plan to impose fees on Chinese ships aims to address perceived imbalances in the shipbuilding sector but may have far-reaching negative implications for international trade and the U.S. economy. The efficacy of this approach remains questionable, with many predicting adverse impacts for all parties involved.
