China has quietly built the world’s most powerful maritime industry, and America is finally starting to fight back. This week, the Trump administration allowed steep penalties on Chinese ships calling at U.S. ports to take effect. It’s the first real counterpunch to Beijing’s decadeslong campaign to dominate global shipping and shipbuilding — an effort built with massive government support and a clear strategy to advance its global ambitions.
The evidence is compelling. Last year, China won orders for three out of every four new commercial ships worldwide — double its market share from just five years ago. Its shipyards and industrial base are so vast that they deliver three new vessels to the Chinese Navy for every one delivered by American yards to the U.S. Navy. And while China holds a 200-1 advantage over America in shipbuilding capacity, Beijing’s maritime reach doesn’t stop at the shipyard gates. Chinese companies operate terminals at more than 100 ports outside of China, including most of the world’s critical maritime chokepoints. They hold nearly a 40-1 edge in commercial fleet operations, and a commanding position over logistics systems, maritime technology, and equipment production.
CHINESE MONEY SEEPS INTO EVERY LEVEL OF AMERICAN POLITICS
This industrial dominance gives China enormous leverage in peace and a decisive advantage in war. It’s no secret that Beijing sees the sea as the key to its rise. Earlier this year, Chinese official media branded Hong Kong-based CK Hutchinson and its 96-year-old founder Li Ka-shing a “traitor” for agreeing to sell its non-Chinese ports to Western buyers. Maritime control is not just about profit; it’s about power.
America, by contrast, has spent decades dismantling its own maritime strength. We gave away our shipbuilding industry, outsourced our merchant fleet, and now rely on foreign-flagged ships — many Chinese-built and owned — to carry the bulk of our trade. The result is a strategic vulnerability that every serious analyst now recognizes.
The new penalties are the first step in addressing that vulnerability. Experts say the penalties will raise the cost of using Chinese ships by at least $3 billion next year. While China has retaliated, its far larger fleet would seem to be more exposed to U.S. measures than ours is to theirs. Shipping and shipbuilding companies from allied countries will benefit most since their ships are already active in U.S. and Chinese trades and are not covered by the penalties.
Still, penalties alone won’t restore America’s shipping and shipbuilding industry. Billions in investment are needed. But simply throwing taxpayer dollars at the problem — or expecting private sector investors to do so — won’t work. China’s cost advantages in labor, steel, and infrastructure are too deep to erase with subsidies. Nor can America, starting almost from scratch, realistically hope to “out-innovate” China any time soon in a sector we largely abandoned years ago.
A more sophisticated strategy is needed, one that sets realistic goals and practical means for attaining them. America must expand and diversify its industrial base and become self-sufficient in shipbuilding. This will have benefits in improving our defense capabilities and provide an insurance policy if conflict breaks out and we need hundreds of vessels in a hurry. While advanced technologies will be key to long-term success, the beginning point is to start building ships again.
America also needs greater control over its maritime supply chains and enough all-American capacity to meet sealift and mariner reserve needs in a conflict.
The key to achieving these baseline objectives is certainty. If the U.S. government commits to building a steady number of commercial ships each year in American yards — ships that can also serve defense and emergency needs — private capital and foreign partners will follow. That predictable demand is the only way to justify large-scale investment in modern shipyards and supply chains.
The proposed SHIPS for America Act would do exactly that. Its Strategic Commercial Fleet Program calls for a fleet of 250 American-flagged commercial ships — enough to meet our updated sealift and mariner reserve requirements — and would phase in a requirement that those ships be built in U.S. yards. Competitive bidding would ensure taxpayers pay only the incremental “Americanization” costs, and revenues from the new Chinese ship penalties would more than cover those costs.
BESSENT AND GREER PLAY ‘GOOD COP, BAD COP’ WITH CHINA TRADE WAR
This is self-preservation, not protectionism. Every great maritime power in history built its naval strength on a foundation of commercial shipbuilding and global shipping capacity. The U.S. once did, too. Rebuilding that foundation is not optional if America intends to remain a global power in the 21st century.
Time is not on our side. Even if we start now, it will still take years to achieve our goals, and China is not waiting. Congressional action on the SHIPS Act and the administration’s next policy release in early November will signal whether this effort is serious or just another missed opportunity.
Michael Roberts is a senior fellow at the Hudson Institute. He was previously a senior executive in the American maritime industry and president of the American Maritime Partnership.
