Challenges Ahead for Trump’s Vision to Revitalize the US Shipbuilding Industry

Challenges Ahead for Trump’s Vision to Revitalize the US Shipbuilding Industry

President Donald Trump is focusing on revitalizing the U.S. shipbuilding industry, a sector that lags significantly behind its main competitor, China. Recently, he signed an executive order aimed at stimulating this vital industry.

The executive order, signed on April 10, commands agencies to craft a Maritime Action Plan. Additionally, it instructs the U.S. trade representative to compile recommendations addressing China’s unfair practices in the shipbuilding sector.

This order also details assessments on how the government could enhance financial support within the industry using mechanisms such as the Defense Production Act. Furthermore, it considers establishing a new Maritime Security Trust Fund, along with investments from allied shipbuilders and various grant programs.

The Complexity of Revitalization

However, experts caution that merely increasing funding may not be enough to resolve the underlying issues within the shipbuilding industry. Bryan Clark, director at the Hudson Institute’s Center for Defense Concepts and Technology, stated that simply injecting more money into U.S. shipbuilding will not enable American commercial builders to compete with the heavily subsidized shipyards of countries like China, South Korea, and Japan.

Clark emphasized that the U.S. government must also create greater demand for domestically built vessels in the near to mid-term. He noted, “In the near to mid-term, the government will need to also drive higher demand for U.S.-built ships.”

Complementary Legislative Efforts

The executive order aligns with the SHIPS for America Act, which comprises legislative measures introduced in December 2024 designed to bolster the U.S. shipbuilding industry. One of its core aims is to reinforce the U.S. Merchant Marine fleet, which plays a crucial role in transporting military materials during conflicts.

The SHIPS Act proposes establishing a Strategic Commercial Fleet Program designed to develop American-built merchant vessels capable of international operations. Additionally, the legislation targets an expansion of the U.S.-flag international fleet with a goal of adding 250 ships over the next decade.

Clark further remarked that combining the executive order with the SHIPS Act would create incentives for flagging and constructing ships in the United States. He believes that such approaches could help the industry meet increased demand more effectively and affordably. While he does not expect the U.S. to outpace its competitors, he stated that this plan would build more resilience into the U.S. shipbuilding sector.

Current Position in Global Shipbuilding

The U.S. currently trails its competitors significantly in shipbuilding output, with China accounting for over 50% of global production compared to a mere 0.1% from the United States. Given this disparity, U.S. policymakers are under pressure to enhance domestic capabilities.

In his recent statements, Trump expressed interest in collaborating with other nations for shipbuilding initiatives. He suggested the possibility of working with Congress to authorize purchasing ships from foreign entities, although specific details about this approach were not outlined.

Understanding the Jones Act

Trump’s ambitions could potentially clash with the Jones Act, a century-old law that mandates only U.S.-built ships carry goods between U.S. ports. Additionally, it stipulates that a majority of the crew must consist of American citizens, and the vessels must remain U.S. owned and constructed.

Proponents argue that the Jones Act is essential for national security, preventing foreign companies from easily accessing the U.S. market. Nevertheless, experts contend that this law has encumbered the shipbuilding sector, stifling competition and inflating costs.

Multiple attempts to repeal or amend the Jones Act have fallen short, reflecting bipartisan support for its preservation. However, some industry experts assert that dismantling the law could be a crucial first step towards rejuvenating the U.S. shipbuilding industry.

Expert Insights on the Future

Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, believes that serious efforts to revitalize the shipbuilding industry should begin with repealing the Jones Act. She stated, “It’s not everything, but it’s a start.”

Colin Grabow from the Cato Institute’s Center for Trade Policy Studies echoed her sentiments, highlighting the complex challenges facing U.S. shipbuilding. He expressed skepticism about efforts to repeal the Jones Act, asserting that the industry’s greatest challenges are intrinsic and multifaceted. Grabow noted, “Absent the Jones Act, it is hard not to think that we’d be doing any worse.”

Ultimately, he argued that a market environment free from competition will lead to unproductivity, signaling the critical need for systemic changes.

A Path Forward

As the Trump administration embarks on this endeavor to reinvigorate the U.S. shipbuilding sector, the combination of new financial strategies, strategic legislation, and potential regulatory changes will play pivotal roles. While the path may be fraught with challenges, experts emphasize that a balanced approach integrating both support and reforms could set the foundation for a more competitive and resilient U.S. shipbuilding industry in the years to come.