2025 Top 100 Importers & Exporters Letter from the Editor

By Peter Tirschwell

The two reasons the US needed its own shipbuilding capacity and commercial fleet are no longer relevant.

Should the US be building commercial ships at scale? We know President Trump’ s answer to that question; supporting US shipbuilding was a key rationale for the fines on China-built and-operated ships announced on April 17 by the United States Trade Representative( USTR).

The action“ sends a demand signal for USbuilt ships,” said USTR Jamieson Greer.

Whether the US should engage in a massive ramp-up in non-military shipbuilding is worth asking, raising questions around reindustrialization, national security and trade facilitation.

To be clear: A bipartisan consensus that the US should at some level be a commercial shipbuilder has existed for decades. That explains the stubborn endurance of the Jones Act, the world’ s most protectionist maritime law. Despite its critics— Sen. John McCain once called it“ an archaic 1920s-era law that hinders free trade, stifles the economy and hurts consumers”— it survived the long era of trade liberalization.

Political support from US seagoing unions and other interests that benefit from the Jones Act kept the law entrenched, with supportive members of Congress and other leaders of the cause feted at the annual Admiral of the Ocean Seas( AOTOS) dinner.

But behind that lies more visceral support for commercial shipbuilding. Memories of World War II help explain that. Without 2,800 Liberty ships and thousands of other merchant vessels launched from US shipyards in just a few years’ time, the Allies would not have won the war.

It is thus unsurprising that the US had a 0.1 % share of shipbuilding as of 2023, with only the Jones Act keeping deep draft commercial shipbuilding afloat. In stark contrast, China’ s rising power catapulted from building less than 5 % of global tonnage in 1999 to more than 50 % by 2023, according to the USTR.

But does that justify the massive revival of shipbuilding Trump has envisioned?“ We’ re going to resurrect the American shipbuilding industry,” he said in March.

The question is, why? The two reasons the US needed its own shipbuilding capacity and commercial fleet are no longer relevant.

One was sealift during conflict. The armada built during WWII supported 8 million US troops deployed overseas fighting in two theaters, as well as support for allies. Given technology and the prevalence of asymmetric conflict, US troop numbers are far lower in current conflicts and will likely diminish further. As it stands today the US military has access to considerable sealift, including 60 subsidized US flag vessels under the Maritime Security Program operated by divisions of Maersk, Hapag-Lloyd, CMA CGM and others— all based in US ally countries. The program was created in the 1990s to maintain a US-flag fleet for military purposes as APL and Sea-Land, the largest US-based carriers, were sold to foreign owners. US forces overseas receive support from commercial container and roll-on / roll-off services, as well as 125 civilian-crewed ships under the Navy’ s Military Sealift Command.

The other rationale— indeed, for shipbuilding in any country— is to support exports. In the postwar decades, American Export Lines symbolized US export dominance. A rough analogy today is the Chinese electric car maker BYD building its own fleet of ro / ro car carriers.

The US will regain manufacturing, Trump nis likely to accomplish that, but if predictions are accurate, to the extent it’ s dominated by high-end goods like semiconductors that can be profitably manufactured in the US, planes— not ships— will be the primary mode of shipment.

The very idea of the US getting back into shipbuilding at scale, moreover, shows an erosion in acceptance of the very concept of global trade, specifically comparative advantage, as a way to build countries’ wealth and prosperity by focusing on what each does best.

It is hard to see a comparative advantage to Americans’ building ships when the cost is three times that of other nations. The $ 333 million per ship charged a few years ago by the Philly Shipyard to build three 3,600-TEU ships for Matson Navigation compares to $ 50 million for building a ship of that same size in an Asian yard.

The US-built cost would be even more today given that the price of building container ships in the US has increased by roughly $ 56,000 per TEU since 2002, while foreign-built increased by less than $ 7,000 over the same period, according to libertarian think tank the Cato Institute.

And so, if it’ s not military sealift or support for exports, what is the rationale?

The lack of one is why the USTR action has received harsh criticism.“ The US shipbuilding sector already faces significant constraints, including a backlog of military orders and ongoing labor shortages,” said World Shipping Council President and CEO Joe Kramek. The action“ is a step in the wrong direction as it will raise prices for consumers, weaken US trade and do little to revitalize the US maritime industry.”

email: peter. tirschwell @ spglobal. com

6 Journal of Commerce | May 5, 2025 www. joc. com