America used to be great at building commercial oceangoing ships. Can it be great again? The current administration looks like it's going to at least try to find out.

President Biden first floated the idea of pushing back against Chinese dominance of shipbuilding. Now, President Trump has threatened to fine Chinese-built ships up to $1.5 million to enter U.S. ports. Additionally, in the first two years of a plan put forth by the Office of the U.S. Trade Representative (USTR), 1% of U.S. exports would have to be shipped using U.S.-flagged vessels, before increasing to 3% after two years, 5% after three years, and 15% after seven years. A similar seven-year ramp-up period would also eventually require 5% of all U.S. exports to be moved on U.S.-built vessels. 

The USTR held two days of public meetings in late March to explore these and other proposed remedies aimed at penalizing ocean carriers that use Chinese-built ships, with a view to reviving commercial shipbuilding in the U.S.  

Ahead of that meeting, a group of more than 30 organizations representing a wide range of the oceangoing supply chain released “The Economic Effects of Proposed Action in the Section 301 Investigation of China’s Maritime, Logistics, and Shipbuilding Policies and Practices,” a study prepared by Joseph Francois and Laura M. Baughman, senior fellows at Trade Partnership Worldwide, LLC, an economic research firm. That report, after examining the various remedies suggested by USTR, finds that “in every case they would result in net losses for the U.S. economy, U.S. trade, and most of the U.S. shipbuilding supply chain… would reduce U.S. GDP, and likely worsen the overall U.S. trade deficit.”

But industry experts argue it’s not a wholly bad idea to intervene in what appears to be a natural, decades-long decline. The U.S. has gone from building 5% of the world’s oceangoing commercial ships in the 1970s to about 0.2% today, measured by gross tonnage. However, the nation builds some of the best military vessels in the world, according to Benjamin Plum, associate partner at consulting firm McKinsey & Company, and one of the authors of a report, "Charting a New Course: The Untapped Potential of American Shipyards."

Historically, Plum says, the U.S. has excelled in building highly complex vessels, such as nuclear submarines and aircraft carriers. “The U.S. builds the best in the world, and does so regularly.”

“You can make an argument that large containerships are an opportunity, but also that the U.S. could and should be involved in myriad other vessel types. I don’t think it has to just be about large, oceangoing ships. There are quite a number of others you could be going with,” Plum says, citing icebreakers, LNG and bulk carriers. He also sees a future in building more vessels for use on American coastal waterways, which must be U.S.-built and operated under the Merchant Marine Act of 1920, commonly known as the Jones Act.

To be sure, Plum says, making that work economically would be a “significant challenge.” But it could happen if there were significant investments in infrastructure, including in heritage facilities such as mothballed shipyards at Newport News and Bath Iron Words. Certain types of vessels, on the other hand, would require whole new yards designed to produce commercially viable ships, similar to the yards in South Korea. “They produce vessels at scale," Plum says. "The facility is designed around the product.”

What's unquestionable, Plum says, is that economically justified shipbuilding in the U.S. would require a high degree of automation and other tools for enhancing human productivity. That means equipping workers with cutting-edge technology and software, including the capability to generate "digital twin" models of yard operations. 

One example is welding. There, Plum says, productivity isn't typically constrained by human workers. "They're some of the best in the world." The problem lies in constraints on materials and supply chains. He suggests that collaborative robots, or cobots, could be deployed in tandem with humans to make welding operations much more efficient. “You’d still need human welders, but you could use them in high precision, high-complexity welding that only they are capable of doing, not the long straight welds that are repetitious.”

“I believe it is possible to make a living wage for workers in shipyards possible while still producing economically viable ships,” Plum says. “We will have to build smarter. We will have to build more effectively and efficiently than other yards. But I actually think that’s possible.”

Even so, the joint industry report, whose sponsors include the American Apparel & Footwear Association, Gemini Shippers Association and National Retail Federation, concludes that, while the U.S. shipbuilding industry might benefit from punitive fees on Chinese-built vessels, other sectors such as farming, manufacturing and retail would suffer significantly. “The negative effects would ripple through supply chains, affecting manufacturers, importers, retailers and other stakeholders like wholesale and retail trade, hospitality and consumer services industries,” the report’s authors argue. 

At the USTR hearings, many U.S. buyers of commercial ships agreed. One typical speaker was Carlos Diaz, chief operating officer of World Direct Shipping, which he characterized as an American family-owned business founded to create a commercial highway between Mexico and the U.S. It owns three ships, two of them built in China.

“The proposed action cannot force the market to use American-made ships, because they are strictly unavailable," Diaz said, adding that it "will be punitive to American operators for legal purchasing decisions made years ago. To succeed, instead of cutting down existing business, start laying the seeds to create new ones.”

Plum says the future could nevertheless see a rejuvenation of U.S. shipbuilding. “I think we have been inspired by and excited to see the recent developments in private-public partnership like the maritime-industrial base,” he says. “And I could imagine and hope that there’s at least a discussion about how the government can partner with industry, or create conditions where industry is confident to invest in reinvigorating shipbuilding.”