What do cars, computers, and toys have in common? They all arrive by ship. Global trade relies heavily on cargo vessels. From electronics to clothing, high-end machinery for factories, and even the cars we drive, they most likely arrive on ships. Approximately 90% of the world’s goods are transported by sea. Furthermore, a significant portion of these ships are manufactured in China. Now, the US aims to change this.
The individual previously holding the office of President is focusing on ships built by China. Similar to his approach to trade and manufacturing, this individual seeks to revitalize shipbuilding in America. The President Donald Trump stated, “We will create a new Office of Shipbuilding in the White House and offer special tax incentives to bring this industry home to America, where it belongs. We used to make so many ships. We don’t make them anymore, very much, but we’re going to make them very fast, very soon. It will have a huge impact.”
His strategy to achieve this goal involves imposing higher taxes on Chinese-made ships. Upon arrival at American shores, these vessels will be subject to port fees, which he intends to increase substantially. This is a significant move to influence global trade dynamics, and it has already encountered considerable opposition.
The initial proposal was quite ambitious. The individual announced a flat fee on Chinese ships of up to $3.5 million per ship per visit. This plan caused concern across US industries, as they depend on ships to transport their goods. Their primary concern was that higher taxes would lead to inflation, increasing prices for American consumers. Global shipping companies echoed this sentiment.
Consequently, Washington has modified the original plan. Fees will now be calculated based on cargo weight or the number of containers. Additionally, instead of applying to every arrival, the fee will be charged up to five times annually. Moreover, there is a way to avoid this fee entirely: by ordering a ship from an American shipyard. No Chinese ships, and an exemption will be granted.
Unsurprisingly, China has voiced its criticism. “We have previously stated our position on the relevant issue many times. I would like to reiterate here that measures such as levying port fees and imposing tariffs on cargo handling equipment are harmful to both sides. They have not only pushed up global shipping costs and disrupted the stability of the global supply chain but have also increased inflationary pressure in the United States, harmed the interests of American consumers and companies, and ultimately failed to revitalize the US shipbuilding industry.”
Global Trade’s Lifeline: China’s Shipbuilding Power and the US Response
One might wonder why this is such a significant issue and why suppliers can’t simply use ships built in other countries. The reality is that China dominates the global shipbuilding industry. In February, over 10,000 ships docked at US ports, and approximately 20% (1,900 ships) were built in China. In fact, over one-third of all vessels at sea were manufactured in Chinese shipyards. China also leads in the production of shipping containers, cranes, and port traffic. Notably, seven out of the ten busiest ports globally are Chinese-owned. Therefore, the Chinese shipbuilding industry cannot be ignored or easily circumvented due to its immense size and ongoing expansion. More than half of all ships currently under construction are in Chinese yards, and they continue to secure new orders.
This dominance did not develop overnight. In the early 2000s, China was a minor player. However, after joining the World Trade Organization (WTO), the industry scaled up rapidly. China required ships to import energy and export goods, leading Beijing to provide state support to its shipyards through subsidies, cheap loans, affordable steel, and labor support. Between 2010 and 2018, Beijing invested $132 billion in shipbuilding. Today, Chinese yards are vast and efficient, benefiting from economies of scale and offering prices that are nearly impossible to match. The US contends that this has undermined fair competition, leaving American yards struggling.
The individual is attempting to counter this by imposing taxes on Chinese ships. However, experts remain skeptical. Even if the plan is successful, it will take time. It requires at least six to seven years for American shipyards to complete a new vessel. This timeframe exceeds a single presidential term, and global trade will persist in the interim. Therefore, while the aim to revitalize US shipbuilding may be valid, the chosen strategy may take years to yield results and could potentially be too late.
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The presence and occupation of a territory by another country pertains to India, as seen in Kashmir and the Prime Minister. How do you perceive the US’s behavior under the individual? Yes, the current administration behaves differently from the previous one. Powers attempting to destabilize the current government in Syria, exactly Iran, maybe Russia, an alternative to Prime Minister Modi committed to South-South cooperation for not over 50%. Is Ukraine prepared to pay the price for that peace? No compromises at the cost of territorial integrity and sovereignty, very much.
