Your bike, your couch, your kids’ toys, even your car most likely crossed an ocean on a ship. And those ships, just like a lot of the stuff they’re carrying, were very likely made in China.
China is by far the world’s largest shipbuilding nation. They have the steel, the aluminum, the parts, the components, the final assembly. China owns that infrastructure. Around 34% of all the ships that are currently on water were made in China. At the same time, about 57.1% of ships currently under construction are at Chinese shipyards. Its share of ships produced globally grew from less than 5% in 1999 to over 50% in 2023.
Not only does it dominate in ship building, China also has vast controls over the wider ecosystem. Today, 95% of shipping container production is owned and operated by China. A single shipyard in China now produces more ships every year than all of the American shipyards combined. Think of that, and it was a business that we used to dominate.
Donald Trump, having already started a trade war with China, has ideas about how to even the playing field. We are also going to resurrect the American ship building industry, including commercial ship building and military ship building. Donald Trump is doing a lot of things to try and reposition the US in the world. Tariffs, for example.
These new measures are about to reset of the relationship with China. Such a reset would have far reaching consequences, potentially altering the landscape and economics of global trade. So, what’s behind this push to bring ship building back to America, and is it even possible?
This is a particularly American obsession at the moment. Once upon a time, the US was the predominant force in shipbuilding. The real high point for us shipbuilding was in World War II when they built these ships called liberties. They built a few thousand of them and they really helped to keep the allies in the fight against Nazi Germany. They supported supply chains and they were critical. What that did was create a very large ship building capacity in the us. But the world has changed a lot.
In 80 years, US ship building began to decline After World War II. By the 1970s, Japan was really taking over. By the eighties, Korea had joined, and by the 2000s, China had joined. And today, really those three countries are everything. China has been slowly building on this power and shipbuilding over the years, but it’s only in recent years that it’s overtaken South Korea and Japan as a world’s top shipbuilding nation.
In the 2000s, China joined WTO, and from there on you can see the economy growing, which really generated a lot of demand for ships. In Beijing’s 10th five-year plan, it actually came out with a vision for growing China’s ports and also ship building industry. So that really laid the foundation and focus for its manufacturing sector for its labor force to really rally around this vision of creating a globally competitive shipbuilding industry.
Given the size and the scale of the way that China manufactures, this made sense. They were already very good at heavy manufacturing of things like steel beams and bars. It has a really strong domestic economy that is export oriented. At the same time, China has a really highly skilled, highly educated by relatively cheap labor force en masse, and these are the hands that you need to build really sophisticated ships.
The government then helped support ship building as a strategic sector for them to move into as they tried to upgrade from basic manufacturing into more and more sophisticated products. And that sort of initial push of government plus the beginning of an infrastructure then becomes a reinforcing cycle. The more that you create ships, the cheaper each one is. That is in stark contrast to the us, which has been exporting its manufacturing jobs for decades.
The US, like most advanced industrialized economies, is mostly a service economy. Manufacturing at the moment in the US across the board is only 8% of total employment. A China built container ship is somewhere in the order of 55 million, and the estimates for a US built comparable ship is more like $330 million. That price difference explains the massive disparity in ship production between 2020 and 2022. China had over 4,000 large oceangoing ships on the order books while the US had just 12. In 2024, the US built 0.01% of the world’s commercial ships.
The Center for Strategic and International Studies reported that one Chinese state-owned ship builder built more commercial vessels by tonnage last year than the entire US shipbuilding industries built since the end of World War II. The problem with shipbuilding is that it’s very capital intensive. It’s very labor intensive. It requires a whole infrastructure of support. So, if you wanna move into large scale production of very expensive, very sophisticated ships, then those are typically accompanied by significant subsidies. And that is where China’s centralized government can really thrive.
Between 2010 and 2018, China’s government’s broad support for shipbuilding totaled $132 billion. And that number doesn’t even include other forms of support, like directing state-owned enterprises to offer low interest loans, debt forgiveness, and equity infusions. If the United States wants to go in that direction, it would have to provide some kind of subsidies to make it commercially viable. For firms to make that transition, you are effectively gonna have to subsidize an industry that isn’t gonna make any money, and it’s gonna cost the taxpayer money.
Donald Trump wants to raise revenue needed to boost ship production by way of fresh levies on Chinese built, owned, and operated ships. The fees start at a million US dollars per docking, and they go up from there. So, it could be a million, it could be as high as three and a half million dollars for every time that a China built ship docks in the United States. And it goes beyond that. Any ship owner that has any Chinese ship in its fleet will also likely face these taxes.
One industry expert went so far as to call the proposal a trade apocalypse, potentially making American goods more costly, driving up freight rates and inflation and diverting trade away from US hubs. That is gonna drive up the cost of goods. So, costs on the whole will go up as a result of this policy. Extreme levies could cause a ripple effect in US supply chains as well.
Ships will reorient their current routing and they will make a lot fewer stops in the United States. The distribution of goods could change. You’ll do a lot more road and rail between ports instead of moving goods by ship. The policy of the Trump administration so far has been to go it alone, America first, America alone.
But if you wanna go from basically very limited shipbuilding to full on finished container cruise ships, that’s a huge jump. So perhaps the better policy would be what part of the supply chain do we think makes sense for US manufacturers to be in, and how are we going to support them in that transition from not being involved very much in shipbuilding to being much more actively engaged.
What the US does have are two strong allies, South Korea and Japan with the capacity for greater output. But the push for us shipbuilding dominance isn’t necessarily profit motivated. There are broader security concerns with allowing to have a maritime edge. So, this is really a story about geopolitics, how the US views shipping as a key national security strategic resource, and how it’s using that to broaden its influence in global trade routes.
The security argument says, doesn’t it seem like a problem that the United States cannot build ships on its own? And doesn’t it seem like a problem that we are dependent on Chinese built ships to move goods around for the United States? But there’s also an overlaying that is a sort of new Trumpian arguments about the importance of heavy manufacturing in general.
The focal point on ship building right now might just be part of a much wider strategy by Donald Trump to move everything around geopolitically. All these tariffs are happening. These are huge charges that he’s proposing. So, you have to frame it in the much wider conversation of what’s going on with US politics right now. I don’t think anybody’s really imagining a grand restoration of shipyards in the us. The countries that have shown they can make money outta shipbuilding, China, Japan, Korea, are so dominant that it’s hard to ever see a return to the way things used to be.
Source: Bloomberg Originals
WORD BANK:
couch /kaʊtʃ/ (n): ghế sofa
stuff /stʌf/ (n): đồ đạc, vật dụng
by far /baɪ fɑːr/ (adv): cho đến nay; vượt xa
aluminum /əˈluː.mə.nəm/ (n): nhôm
assembly /əˈsem.bli/ (n): sự lắp ráp
shipyard /ˈʃɪp.jɑːrd/ (n): xưởng đóng tàu
dominate /ˈdɑː.mə.neɪt/ [B2] (v): thống trị, chi phối
dominant /ˈdɑː.mə.nənt/ [B2] (adj): vượt trội, chiếm ưu thế
sth and sth combined /kəmˈbaɪnd/ (phr): khi cái này và cái kia kết hợp lại
even the playing field /ˈiː.vn ðə ˈpleɪ.ɪŋ fiːld/ (idiom): tạo sân chơi công bằng
resurrect sth /ˌrez.əˈrekt/ [C1] (v): khôi phục, làm sống lại
reposition /ˌriː.pəˈzɪʃ.ən/ [C1] (v): tái định vị
obsession /əbˈseʃ.ən/ (n): nỗi ám ảnh
once upon a time /wʌns əˈpɑːn ə taɪm/ (adv): ngày xửa ngày xưa
predominant force /prɪˈdɑː.mə.nənt fɔːrs/ (n phr): thế lực chủ đạo
ally /ˈæl.aɪ/ (n): đồng minh
Nazi Germany /ˈnɑːt.si ˈdʒɝː.mə.ni/ (n): Đức Quốc xã
take over sb /teɪk ˈoʊ.vɚ/ (v): tiếp quản, chiếm quyền kiểm soát ai đó
overtake sb /ˌoʊ.vɚˈteɪk/ (v): vượt qua, vượt mặt ai đó
lay the foundation /leɪ ðə faʊnˈdeɪ.ʃən/ (v phr): đặt nền móng
rally around sth /ˈræl.i əˈraʊnd/ (v phr): đoàn kết, tập hợp xung quanh điều gì
given sth /ˈɡɪv.ən/ (prep): xét đến, cho trước
make sense (expr): hợp lý
steel beam /stiːl biːm/ (n): dầm thép
steel bar /stiːl bɑːr/ (n): thanh thép
export oriented /ˈek.spɔːrt ˈɔːr.i.en.tɪd/ (adj): định hướng xuất khẩu
en masse /ɑːn ˈmæs/ (adv): hàng loạt, ồ ạt
sophisticated /səˈfɪs.tɪ.keɪ.tɪd/ [C1] (adj): tinh vi, phức tạp
strategic /strəˈtiː.dʒɪk/ [B2] (adj): mang tính chiến lược
initial push /ɪˈnɪʃ.əl pʊʃ/ (n phr): cú hích ban đầu
plus sth /plʌs/ (prep): cộng thêm
a reinforcing cycle /ˌriː.ɪnˈfɔːr.sɪŋ ˈsaɪ.kəl/ (n phr): vòng lặp củng cố
in stark contrast to sth /stɑːrk ˈkɑːn.træst/ (phr): trái ngược hoàn toàn với
across the board /əˈkrɔːs ðə bɔːrd/ (adv): trên toàn diện
comparable /ˈkɑːm.pər.ə.bəl/ [B2] (adj): tương đương
disparity /dɪˈsper.ə.ti/ [C1] (n): sự chênh lệch
oceangoing ship /ˈoʊ.ʃənˌɡoʊ.ɪŋ ʃɪp/ (n): tàu viễn dương
tonnage /ˈtʌn.ɪdʒ/ (n): trọng tải
capital intensive /ˈkæp.ɪ.t̬əl ɪnˈten.sɪv/ (adj): thâm dụng vốn
labor intensive /ˈleɪ.bɚ ɪnˈten.sɪv/ (adj): thâm dụng lao động
subsidy /ˈsʌb.sə.di/ (n): trợ cấp
subsidize /ˈsʌb.sə.daɪz/ (v): trợ cấp
thrive /θraɪv/ [B2] (v): phát triển mạnh
broad /brɔːd/ (adj): rộng khắp
state-owned enterprise /steɪt oʊnd ˈen.t̬ɚ.praɪz/ (n): doanh nghiệp nhà nước
low interest loan /loʊ ˈɪn.trəst loʊn/ (n): khoản vay lãi suất thấp
debt forgiveness /det fərˈɡɪv.nəs/ (n): xóa nợ
equity infusion /ˈek.wə.t̬i ɪnˈfjuː.ʒən/ (n): bơm vốn cổ phần
commercially viable /kəˈmɝː.ʃəl ˈvaɪ.ə.bəl/ (adj): khả thi về mặt thương mại
revenue /ˈrev.ə.nuː/ (n): doanh thu
levy sth on sb /ˈlev.i/ (v): áp thuế, đánh phí lên ai đó
fleet /fliːt/ (n): hạm đội, đội tàu
a trade apocalypse /treɪd əˈpɑː.kə.lɪps/ (n): thảm họa thương mại
drive up sth /draɪv ʌp/ (v phr): đẩy tăng
freight rate /freɪt reɪt/ (n): cước vận chuyển
inflation /ɪnˈfleɪ.ʃən/ (n): lạm phát
divert sth away from sth /daɪˈvɝːt/ (v): chuyển hướng khỏi cái gì
a ripple effect /ˈrɪp.əl ɪˈfekt/ (n): hiệu ứng lan tỏa
distribution /ˌdɪs.trəˈbjuː.ʃən/ (n): phân phối
maritime /ˈmer.ə.taɪm/ (adj): hàng hải
edge /edʒ/ (n): lợi thế
geopolitics /ˌdʒiː.oʊˈpɑː.lə.tɪks/ (n): địa chính trị
overlaying /ˌoʊ.vɚˈleɪ.ɪŋ/ (adj): chồng lên, bao trùm
focal point /ˈfoʊ.kəl pɔɪnt/ (n): điểm trọng tâm
charge /tʃɑːrdʒ/ (n): khoản phí
frame sth in a wider conversation (v phr): đặt vấn đề trong bối cảnh rộng hơn
grand restoration /ɡrænd ˌres.təˈreɪ.ʃən/ (n): sự phục hưng lớn
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