During the pandemic, Americans learned how painful supply chain disruptions can be. Now, a newly proposed action from the Trump administration could unintentionally make the pandemic’s supply chain disruptions seem tame.
President Trump is looking to rapidly rebuild American shipbuilding. That’s an important goal since the erosion of U.S. shipbuilding — and China’s growing dominance in global shipbuilding — must be confronted. But the administration’s proposed plan could send costs soaring for U.S. consumers, grind U.S. exports to a halt, wreak havoc at U.S. ports, and completely undermine the president’s own energy and trade agendas.
The problem rests in a plan authored by the U.S. Trade Representative (USTR) to charge exorbitant port fees — in some cases $1.5 million dollars — for every incoming vessel that’s part of a fleet with even one Chinese-built ship.
The proposal is intended to encourage the use of U.S.-built vessels. Unfortunately, for goods being shipped today, there simply isn’t a shipping fleet in the world that won’t be hit by the port fees. According to shipping analysts, Chinese-built container vessels comprised 81% of the global market in 2024. For bulk carriers, Chinese ships represent 75% of the global fleet.
Although Chinese control of shipping and shipbuilding absolutely demand a response, the proposed fee will hurt domestic U.S. industries more than China. Since there’s currently no way to avoid the fees, U.S. importers and exporters are going to be walloped by punishing costs.
While the ultimate goal is to resurrect domestic U.S. shipbuilding, our current shipbuilding capacity has atrophied to the point where bringing it back could take decades. In other words, there aren’t U.S.-made shipping vessels to charter right now — and there won’t be for some time.
If the administration’s plan is implemented in the coming weeks as planned, the impact will be immediate — a major case study in unintended consequences.
A wide range of U.S. industries have submitted comments to the USTR painting a remarkably grim picture.
Shippers are warning the proposed fees would reach tens-of-billions of dollars for their industry, and those costs will be passed on to U.S. consumers. Shippers will also turn to large vessels to reduce their number of port calls, creating congestion at major ports and dealing a devastating blow to secondary U.S. ports.
The Association of Ship Brokers & Agents told USTR, “If the maximum fees are imposed, the resulting economic pain will reverberate through every sector of the U.S. economy and in every household.”
The president has said that he wants to help America’s farmers and energy producers grow their overseas markets. But they’ll likely be some of the hardest hit. In fact, the oil and gas industry warned the plan could “undermine President Trump’s ‘energy dominance’ agenda,” by making it uncompetitive to export U.S. energy.
Similarly, America’s mining sector warned, “increased costs, supply chain disruptions and even the outright inability to import or export critical materials could bring the industry to a standstill.”
And echoing concerns from other farmers, the American Soybean Association warned, “U.S. soybeans will be effectively shut out from our global export markets.”
Rebuilding American shipbuilding is urgently important.
But it must be done without clobbering America’s consumers and bringing U.S. exports to a standstill. Common sense needs to prevail.
Matthew Kandrach is president of Consumer Action for a Strong Economy, a free-market advocacy organization.
