President Donald Trump is moving to establish a new executive office and regulations to encourage growth in the United States domestic shipbuilding industry as the nation contends with China’s rise.
The United States Office of Shipbuilding will coordinate actions to bolster the nation’s foundering shipbuilding industry as the administration simultaneously issues heavy fees on commercial operators of Chinese-made vessels.
He added that there would be tax incentives to boost domestic shipbuilding.
The chief executive officer of CMA CGM, Rodolphe Saade, who joined Trump in the Oval Office, said the investment would create 10,000 jobs and include the expansion of container ports and the creation of an air cargo hub in Chicago.
Such a move would likely generate enormous cash inflows but could deter business given the world’s current reliance on Chinese manufacturers for commercial seacraft and cargo containers.
A working draft of the executive order states it would also charge a fee for any vessel that enters a U.S. port regardless of where it was built or flagged if that vessel is part of a fleet that includes other vessels built or flagged in communist China.
The Epoch Times has reached out to the White House for further details.
It’s unclear how well received the order will be, given its associated costs and the move to pursue fines en masse could be met with choppy waters.
The World Shipping Council, the primary trade association for international shipping, has said the fees could hit virtually every ship calling at U.S. ports, incurring up to $30 billion in annual costs on American consumers, and potentially doubling the cost of shipping U.S. exports.
US Shipbuilding: Small and Costly
The administration nevertheless considers bolstering domestic and allied shipbuilding a priority given the immense economic and military advantage that has been ceded to China in recent decades as the communist power has rapidly taken over responsibility for the majority of the world’s shipbuilding.
U.S. domestic shipbuilding has all but collapsed in the past 50 years as commercial enterprises have sought out faster and cheaper builders to satiate the immense demands of global trade.
At present, the United States only builds between 0.1 and 0.2 percent of the world’s ocean-going commercial ships as measured by gross tonnage.
The collapse in the nation’s overall shipbuilding capacity has also wreaked havoc on its military supply chain by creating severe supply chain bottlenecks.
The U.S. Navy devised a plan in 2016 to increase its battle force to 355 ships by 2030 and in 2023 planned to raise that number further to 381 ships.
Instead, the force has languished between 270 and 300 vessels, a range it has maintained since 2003.
“Navy ships cost billions more and take years longer to build than planned while often falling short of quality and performance expectations,” the report said.
That poor performance is in no small part due to the nation’s larger shipbuilding woes.
There are currently only nine shipyards in the United States that produce naval vessels, each tending to specialize in a particular type of seacraft, and each suffering from one or more issues including space limitations, aging equipment, and labor shortages.
Current estimated delays for building Virginia-class submarines and Constellation-class frigates are at three years.
With even the most basic amphibious vessels often rolling out of production a year behind schedule.
Elsewhere, an inability to adopt leading ship design practices used by commercial developers throughout the rest of the world has resulted in wanton levels of waste.
Global Shipbuilding Profits Boost China
Communist China has reaped the rewards of the United States’ retreat from shipbuilding, gaining significant commercial and military advantage from its expansive efforts in the sector.At present, China produces more than 53 percent of the world’s commercial vessels and 85 percent of the world’s shipping containers.
That corporation, the China State Shipbuilding Corporation (CSSC), has been sanctioned by the United States for its central role in building naval vessels for the Chinese Communist Party’s (CCP) military wing.
To wit, China maintains 35 shipyards that either produce military vessels or else are owned by the CSSC and maintain ties to military projects, and there are another 272 shipyards that are under state ownership or subject to CCP political control.
The cross-pollination of military and commercial entities in China has resulted in the creation of a global shipbuilding apparatus that effectively funds Chinese military development through the sale of ships to nations the world over.
According to the CSIS report, more than 75 percent of the production at China’s military-linked shipyards were commercial vessels destined for firms based outside of China or Hong Kong.
They include U.S. military allies Denmark, France, Greece, Japan, and South Korea, and other partners including Qatar, Singapore, Switzerland, and even Taiwan.
“These foreign firms are thus funneling billions of dollars to Chinese shipyards that also make warships, advancing China’s modernization of its navy and providing Chinese defense contractors with key dual-use technology,” the report said.
“The erosion of U.S. and allied shipbuilding capabilities poses an urgent threat to military readiness, reduces economic opportunities, and contributes to China’s global power-projection ambitions.”
With that capital in hand and a vast shipbuilding industry under its control, the CCP’s military battle force overtook the U.S. Navy in terms of total combat vessels between 2014 and 2016, and the communist power is now expected to deploy a 425-ship fleet by 2030, even as the United States struggles to meet its own goal of 355 ships.
That strategic advantage might be offset some by the Trump administration’s push to reinvigorate American domestic shipbuilding.
It will also likely require the United States to encourage growth among its key shipbuilding allies, namely Japan and South Korea, which are the world’s second and third largest shipbuilders behind China.
“In the long term, the United States needs to invest in expanding shipbuilding capacity outside of China by rebuilding U.S. industry and by leveraging the existing strengths of key like-minded nations,” the CSIS report said.
