Letter from the Editor

By Mark Szakonyi

Increased geopolitical risks are pushing the commercial and government spheres closer together .

US President Donald Trump has maritime on his mind , flexing an expansionist worldview to expand regional control and limit Chinese and Russian influence in the Western Hemisphere .

In the very early days of his second administration , the White House has cited the security threat of Russian and Chinese shipping in Arctic waters as justification for Trump ’ s designs on Greenland and Canada , and has escalated pressure on Panama to push out a Hong-Kong based marine terminal operator it deems under China ’ s sway .

The president ’ s missives haven ’ t impacted container shipping , but they are noteworthy , nonetheless . Commercial shipping and the extensions of military power , most visible via navies and strategic port investment such as China ’ s Belt and Road , have rarely come into conflict while sharing the same waters . But increased geopolitical risks , largely due to heightened tensions between China and the US , are pushing the commercial and government spheres closer together .

As the US looks to strengthen its regional sphere of influence , bipartisan political attention is building to boost US shipbuilding , and thus , its ability to project power in the Arctic and reduce dependence on foreign carriers . While political interest for a US shipbuilding renaissance might be the most favorable since the Nixon administration , the challenge is daunting .

Rebuilding an industry that ’ s been in decline since World War II would take massive and consistent multiyear investment , unlike , for example , renaming a body of water shared with Mexico and Cuba . Once at more than 2,000 vessels and 300 shipyards , the US international merchant fleet now numbers roughly 80 and just 20 or so domestic shipyards .

During a call in November with the president of South Korea , Trump expressed interest in the increased cooperation between the two countries ’ shipbuilding industries , according to Nikkei Asia . In December , Hanwhan Systems and Hanwha Ocean acquired Philly Shipyard , which builds US-flag ships for Jones Act trades , for roughly $ 100 million .

The outgoing Biden administration , which like Trump defended US Steel from Japanese buyers , blasted Chinese steel subsidies for unfairly propping up Chinese shipbuilding . On Feb . 10 , Trump announced a 25 % tariff on US imports of steel and aluminum , effective March 12 .

US shipbuilding proponents are encouraged by Trump filling his new cabinet with three people known to have supported US shipbuilding while in Congress : former congressmen Mike Waltz and Jamieson Greer are now national security advisor and US trade representative , respectively , while ex-Sen . Marco Rubio is Secretary of State .

The Trump administration has a legislative vehicle at its disposal via the SHIPS Act . Introduced in the Senate and House and backed by both sides of the aisle , the SHIPS Act would require all government cargoes to be shipped via the US-flag fleet . The legislation , if passed , would mandate that an annually increasing percentage of commercial goods imported from China move on US-flag ships starting in 2029 , eventually reaching 10 %. The legislation as of mid-February had yet to start moving through either of the respective Senate or House committees .

Panama squeeze

More immediately , the Trump administration is putting the heat on Panama ’ s government for allowing Hong Kong-based Hutchison Port Holdings to operate a port on either side of the Panama Canal through a long- standing concession that began in 1997 and was renewed in 2021 .

Louis Sola , newly tapped by Trump as chairman of the Federal Maritime Commission and a one-time Panama resident , told senators during a Jan . 28 committee meeting that US terminal operators didn ’ t get a fair shake in the country due to corruption in the government . US-based SSA Marine , Singapore-based PSA and Taiwan-based Evergreen Terminal also have terminals in Panama .

Panama announced on Feb . 7 that it wouldn ’ t renew its membership in China ’ s Belt and Road initiative , the massive infrastructure investment designed to string ports , including Cosco Shipping ’ s newly opened mega-terminal in Peru , like proverbial pearls . Trump has proposed a massive US sovereign investment fund , which could hypothetically aid the canal in a $ 2 billion project to ensure it has enough water to fully support its locks .

CK Hutchison Group ’ s container division , spanning 298 berths and 53 ports in 24 countries , reports that only 8.9 % of its revenue comes from its Panama operations , which contributes just 1.3 % to its global

4 Journal of Commerce | March 3 , 2025 www . joc . com