The Trump Administration’s Maritime Action Plan, released on February 13, proposes to channel potentially enormous amounts of money into the flaccid U.S. shipbuilding industry. While the plan is far from becoming law, some of the Administration’s proposals could weigh heavily on U.S. foreign trade by imposing new fees on imports and requiring that some containerized cargo travel on U.S.-flag ships.
The plan would establish a Maritime Security Trust Fund, funded by a fee based on the weight of the cargo aboard foreign-built vessels arriving at U.S. ports. It does not say how much money would be needed to support a serious commercial shipbuilding program. Here’s a back-of-the envelope calculation: based on recent import volume, matching China’s estimated shipbuilding subsidies of $15 billion a year would require a fee of $25 per metric ton. This would add around $500 to the cost of importing an average 40-foot container. Such a fee would raise the cost of shipping a container across the Pacific by about one-quarter, across the North Atlantic by one-third.
Note that a fee of this size probably wouldn’t do much for commercial shipbuilding if military shipyards share the pie, a point on which the Trump plan is unclear. In any case, such a fee would not raise enough revenue to compensate shipbuilders for the exorbitant cost of having to use U.S.-made steel, which costs more than twice as much as Chinese-made steel due to U.S. tariffs.
Who will buy the commercial ships U.S. shipyards are expected to turn out? The Maritime Action Plan foresees that “U.S.-built ships should eventually ferry the nation’s international trade.” Until then, the plan would “require high-volume exporting economies to transport a gradually increasing percentage of their U.S.-bound containerized cargo on qualifying U.S. vessels,” including foreign-built vessels that could be registered under the U.S. flag. Given that hundreds of thousands of U.S. importers and foreign exporters make shipping arrangements on a case-by-case basis, it’s hard to imagine how governments would determine which ships they must use.
However, it’s not hard to imagine that the policies outlined in the Maritime Action Plan could make it more expensive to bring imports to the United States.
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