Praying for an American Shipbuilding Renaissance

By Jock O’Connell

It’s Easter Week, and as much as many Americans may seek relief by spinning the “Wall-Street-Isn’t-The-Real-Economy” prayer wheel, there is growing consensus among economic analysts that the nation is headed into a recession brought on by President Trump’s “Liberation Day” tariffs and subsequent permutations thereof.

Headlines such as “Goldman Sachs raises odds of US recession to 45%” and “JPMorgan Model Shows Recession Fear in Markets Spiking Up to 79%” have become staples of the daily media.

And it's not just the Masters of the Universe who are scared.

Down on the docks, there is mounting concern that the new tariffs the U.S. is imposing, and the retaliatory tariffs being levied against American exports will shrink shipping traffic. The neighboring San Pedro Bay Ports of Los Angeles and Long Beach are both predicting significant declines in container traffic through America’s busiest maritime gateway.  

But such are the almost daily gyrations in the tariff policies being announced by the White House that it is next to impossible to assay their ultimate impact. To paraphrase an aphorism occasionally attributed to occasional Connecticut resident Samuel Clemens, if you don’t like the tariffs, just wait a minute. 

So in this month’s commentary I won’t be writing about President Trump’s tariffs but rather about a separate scheme that has been formulated, then reconsidered, reformulated, and then taken back to the drawing board by the U.S. Trade Representative (USTR). That would be the broadly debilitating proposal to impose fees of at least $1 million per port call on the great majority of cargo vessels calling at U.S. seaports.

Although the proposal is a response to China’s aggressive efforts to dominate the world’s shipbuilding industry, its consequences would be much broader. By some estimates, the fee would cover as much as 90% of all commercial cargo-carrying vessels now in service. Ships operated by Chinese shipping lines would face a $1 million port call fee, while vessels built in Chinese shipyards would be assessed a $1.5 million fee for each port call. Not stopping there, shipping lines that have placed more than 50% of their new vessel orders with Chinese shipyards would be charged a $1 million entry fee.

These port-call levies are ostensibly intended to generate the billions of dollars needed to re-establish shipbuilding as a profitable enterprise in this country. Behind it is a fear that China will monopolize production of the world’s waterborne shipping fleets, a prospect that has obvious national security implications for the United States.

People engaged in international trade and especially those involved in maritime shipping have not been mincing words. From very nearly every corner of the global trade community, the technical term ‘meshuga’ is being used to describe the proposal as first announced.

Port	Total Trade Value	Import Value	Export Value
Los Angeles/Long Beach	$447.875 Billion	$386.402 Billion	$61.473 Billion
NWSA (Tacoma/Settle)	$76.893 Billion	$61.7767 Billion	$14.126 Billion
Oakland	$52.379 Billion	$32.481 Billion	$19.899 Billion
Port Hueneme, CA	$17.866 Billion	$16.908 Billion	$958 Million
Portland, Oregon	$14.577 Billion	$10.602 Billion	$3.975 Billion
Richmond, CA	$11.335 Billion	$8.604 Billion	$2.731 Billion
San Diego	$8.028 Billion	$7.533 Billion	$495 Million
Vancouver, WA	$4.995 Billion	$2.438 Billion	$2.557 Billion
Kalama, WA	$4.355 Billion	$231 Million	$4.123 Billion
San Francisco	$3.409 Billion	$2.411 Billion	$998 Million
Longview, WA	$3.329 Billion	$99 Million	$3.230 Billion
Aberdeen-Hoquiam, WA	$2.101 Billion	$944 Million	$1.157 Billion
San Pablo Bay, CA	$1.949 Billion	$1.948 Billion	$1 Million
Anacortes, WA	$1.374 Billion	$831 Million	$543 Million
Stockton, CA	$1.371 Billion	$906 Million	$465 Million
Everett, WA	$1.265 Billion	$1.170 Billion	$95 Million

That uproar of dissent, however, did not deter President Trump from signing an executive order on April 9th directing the USTR to proceed with implementing the non-fee components of a new shipbuilding scheme. His order called for creation of a Maritime Security Trust Fund to provide reliable funding for programs to expand America’s maritime manufacturing capacity. The executive order did, however, appear to give the USTR enough wiggle room to promise critics that a much better thought-out fee structure would not be as disastrous as feared.

Let’s withhold judgment on that imponderable.

There are two issues worth addressing here: Which U.S. ports would go out of business, and how likely is it that the desired renaissance of shipbuilding in this country would ever occur?

First, as is uniformly expected, the imposition of port entry fees would concentrate maritime shipping calling at U.S. ports, with larger vessels serving fewer U.S. ports. It would make no sense for smaller vessels to call at niche ports if those vessels would be assessed a fee that exceeds the value of the commodities being transported.

On the U.S. West Coast, there were 22 seaports that engaged in international trade last year. Of these, eighteen reported foreign trade valued in the billions of dollars. Exhibit A displays those ports.

Another four ports (Redwood City in California and Washington State’s Port Angeles, Port Townsend, and Point Roberts) denominated their foreign trade flows in the millions of dollars. It would not be unreasonable to conclude that the levying of port-call fees such as those originally weighed by the USTR would severely challenge the business models of those four.

Although it might at first seem that the chief beneficiaries of the port-call fees would be the largest USWC ports that are equipped to handle larger vessels, things could shake out very differently.

Commodities normally traded through the Northwest Seaport Alliance Ports of Tacoma and Seattle could be diverted to the nearby Port of Vancouver or even the more distant but currently under-utilized Port of Prince Rupert in British Columbia. Similarly, port-call fees could drive shipments from the Ports of Los Angeles and Long Beach in Southern California to the Mexican Ports of Manzanillo and Lazaro Cardenas.

To be sure, the April 9 executive order seeks to deter such diversions by assessing the Harbor Maintenance Tax on cross-border traffic. And the heightened tariffs the president has imposed on shipments entering the United States from Canada and Mexico might help discourage such diversions for the time being. But the aim of the port-call fees is to raise the funds needed to sustain what would necessarily be a long-term commitment to nurturing domestic shipyards. Whether the president’s tariffs on goods arriving from Mexico and Canada would be rescinded in the short-term is anyone’s guess. In any event, cargos involving U.S. importers and exporters have been moving through Canadian and Mexican ports for years despite complaints that Harbor Maintenance Tax was being skirted.

Even if the diversion issue could be successfully managed, the introduction of onerous or even semi-onerous port-call fees would leave the Port of Oakland in an awkward and potentially unprofitable position. Eastbound transpacific trade now typically involves an initial port call at LA or Long Beach before looping up the coast to Oakland before heading back across the Pacific. Whether ocean carriers plying this route would opt to incur a substantial additional charge for the privilege of serving the smaller Northern California gateway must be regarded as a toss-up. At the very least, a new port-call fee is more likely to thwart Oakland’s hopes to attract a first-call service. In any case, the added cost of exporting through Oakland would limit the port’s ability to compete for cargo, especially if agricultural exporters opted to use LA or Long Beach to ship their goods abroad. (There is hope that the USTR might be persuaded to substitute a per-voyage charge for a per-call fee. That would ease the plight of Oakland and other second-call ports, but the USTR is being tight-lipped.)

Lest this commentary seems too dismal, let’s agree to leave aside the question of how many exporters, especially those in farming, would be priced out of foreign markets because port-call fees would be piled on top of already rising transport charges.       

Let’s instead consider a parallel question that should be raised: How realistic is it to believe that the domestic commercial shipbuilding industry could be resurrected when the nation’s few existing shipyards cannot even meet the immediate needs of the United States Navy?

The American shipbuilding industry has pretty much been languishing since the last World War Two Liberty Ship, the Albert M. Boe, slid down the ways at the New England Shipbuilding Corporation’s yard in South Portland, Maine in September 1945.

There have been periodic attempts since then to revive the nation’s shipbuilding prowess, but all eventually fell prey to the exigencies of competing federal budget priorities. Today, according to naval infrastructure expert Brian Potter: “American ship costs and construction times are far higher than those around the world, and markets that once provided a healthy amount of work for shipbuilders (such as inland and coastal trade) have greatly declined. The number of active shipyards has continued to fall, and the yards that do exist mostly do either naval work or build vessels to support offshore oil drilling.”

By comparison, the USTR laments that “China’s shipbuilding market share grew from less than 5 percent of global tonnage in 1999, to over 50 percent in 2023; increasing China’s ownership of the commercial world fleet to over 19 percent as of January 2024; and controlling production of 95 percent of shipping containers and 86 percent of the world’s supply of intermodal chassis.”

According to an article in the February 2025 edition of the Proceedings of the U.S. Naval institute, the U.S. Navy would need to commission ten to twelve new ships each year to maintain its present goal of a 381-ship fleet of combat and support vessels. That is a long comedown from the Reagan administration’s goal of a 600-ship fleet. Even so, limited shipyard capacity has resulted in the Navy ordering just six new ships under the FY 2025 budget.

So, at a time when slashing budgets and cutting taxes are being prioritized, what should we make of a scheme to impose substantial port-call charges on vessels that facilitate much of America’s foreign trade?

Ostensibly, the fees raised would go to support the restoration of domestic shipbuilding. Yet, owing to mercurial policymaking and wavering resolve to follow through on long-term funding commitments, American shipyards are currently unable to meet even the basic requirements of the United States Navy. Yet, under the most mercurial of American presidents, is every element of the nation’s maritime supply lines to be taxed to meet a goal that has eluded every other peacetime administration in our history?

What could go awry?

The commentary, views, and opinions expressed by Jock O’Connell are his own and do not reflect the views or positions of the Pacific Merchant Shipping Association. PMSA does not endorse, support, or make any representations regarding the content provided by any third party commentator.