U.S. tariffs and global shipping industry

Muhammad Zamir Assadi

In an attempt to revive its struggling shipbuilding industry, the US Trade Representative (USTR) has implemented restrictive measures targeting China's shipbuilding and related industries to curb its dominance in global maritime, logistics, and shipbuilding sectors. These measures include imposing fees on Chinese-flagged ship operators, operators using Chinese-built ships, and those ordering ships from Chinese shipyards, with charges ranging up to $1.5 million per vessel or voyage. Conversely, operators using US-built ships will receive fee reductions of up to $1 million per voyage. Additionally, a cargo transport quota system will require 5% of US export cargo to be carried by US-flagged ships within three years, increasing to 15% within seven years, with 5% mandated to be transported by domestically built ships. These actions aim to incentivize the use of US-built ships and reduce reliance on Chinese maritime services.

Critics argue that the proposed measures— punitive tariffs, port fees on Chinese-built ships, and shipping restrictions—could disrupt global supply chains, raise logistics costs, and ultimately harm U.S.

The financial burden of these measures would likely fall on American consumers. Analysts estimate that additional tariffs and service fees could increase China-U.S. shipping costs by 15%, driving up inflation and raising the prices of consumer goods imported from Asia. This outcome would contradict the U.S. government’s efforts to control inflation, creating a counterproductive cycle. 

Moreover, the policy could fragment global shipping alliances. Many of the world’s most advanced LNG carriers, bulk carriers, and container ships are now manufactured in China because they offer superior efficiency and cost-effectiveness. Shipping companies such as Maersk, Mediterranean Shipping Company (MSC), and CMA CGM rely heavily on Chinese-built vessels. Faced with high fees at U.S. ports, these companies may reroute cargo through alternative hubs in Canada, Mexico, or Latin America, bypassing the U.S. entirely. This shift could lead to reduced activity at U.S. ports, job losses in the logistics sector, and higher costs for American importers and exporters. 

At its core, the U.S. strategy reflects a nostalgic attempt to revive an industry that has been in decline since the 1970s, when the U.S. was the global leader in shipbuilding, producing over 70 ships annually. Today, the industry is a shadow of its former self, hampered by protectionist policies like the Jones Act, which mandates that goods transported between U.S. ports must be carried on American-built and American-crewed vessels. Such measures have inflated domestic shipbuilding costs and eroded competitiveness. 

The American container and dry bulk fleets account for less than 1.4% and 1% of global shipping capacity, respectively. Furthermore, U.S. shipyard labor costs are approximately $98 per hour—four times higher than China’s—making domestic shipbuilding far less competitive.

If the U.S. is serious about rebuilding its maritime industry, it must prioritize technological innovation, workforce development, and global collaboration over trade restrictions. Countries like South Korea and Japan, which maintain strong shipbuilding sectors, focus on innovation and strategic partnerships rather than punitive tariffs. Their approach ensures competitiveness without disrupting global trade.