U.S. Trade Representative: China's Shipbuilding Sector Hurts U.S., Is Actionable

The U.S. Trade Representative (USTR) has issued a stark warning, stating that China's dominance in the global shipbuilding sector is hurting U.S. national security and economic interests, and is actionable under Section 301 of the Trade Act of 1974. The findings, released on January 17, 2025, highlight the growing concern over China's targeted dominance in the maritime, logistics, and shipbuilding sectors, which has significant implications for the U.S. and global trade.



The USTR investigation found that China's targeting for dominance in these sectors is unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition and creates dependencies on the People's Republic of China (PRC), increasing risk and reducing supply chain resilience. Furthermore, the PRC's extraordinary control over its economic actors and these sectors exacerbates the situation.

The USTR also found that China's targeting for dominance burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.

The U.S. now ranks 19th in the world in commercial shipbuilding, building less than 5 ships each year, while China builds more than 1,700 ships annually. In 1975, the U.S. ranked number one in shipbuilding, constructing more than 70 ships a year. China's share of the global shipbuilding market has expanded to over 50% in 2023, up from around 5% in 2000, largely aided by government subsidies.

The USTR's findings provide a basis for finding that responsive action is appropriate. Any determination on responsive actions would be considered in the next stage of the investigation. The U.S. unions that petitioned for the investigation have highlighted the entrenchment of the PRC's dominance, which means that U.S. international trade is increasingly carried out on vessels made in China, financed by state-owned Chinese institutions, owned by Chinese shipping companies, and reliant on a global maritime and logistics infrastructure dominated by China.

The USTR's findings underscore the need for the U.S. to take action to address China's unfair trade practices and protect its national security and economic interests. The U.S. can respond by investing in its domestic shipbuilding industry, promoting fair trade practices, encouraging alternative supply chains, addressing intellectual property theft and forced technology transfer, and engaging in multilateral negotiations to address China's non-market policies and practices. By taking these steps, the U.S. can strengthen its supply chains, support economic growth, and maintain its competitive edge in the global market.