Built in America 🚢

The year was 1944, and World War II was at its peak. The U.S. Navy needed fast, powerful battleships to crush fascism and defend freedom. 

Enter USS Missouri (BB-63) — built at the Brooklyn Navy Yard, a symbol of American strength. This mighty warship was ready for battle in just 1,257 days, from keel laying to commissioning. Her quarterdeck would later become the site of Japan’s surrender, marking the end of World War II.

The sheer ability to build ships at breakneck speed made the United States the world's biggest and most powerful navy during the 1940s. But nearly eight decades later, U.S. shipbuilding is in shambles.

“We used to make so many ships.  We don’t make them anymore, ” said President Trump while addressing the Joint Session of Congress in March 2025. 

And he’s right.

In 2023, the U.S. Navy added just two ships to its fleet. Meanwhile, China added 30 new ships, rapidly expanding its naval power.

The gap is even wider in commercial shipping. Today, only about 80 U.S.-flagged ships operate in international trade — compared to over 5,500 China-flagged vessels dominating global waters.

Once the world’s leading shipbuilder, America is now struggling to keep up.

In this issue of CrossDock, we're diving into the rise and fall of American shipbuilding. We’ll also take a closer look at China’s shipbuilding dominance and break down what the U.S. is doing to fight back.

Win and lose

It is not an overstatement to say that at its peak, U.S. shipbuilding was an industrial powerhouse unmatched in scale and efficiency. During World War II, American shipyards produced vessels at an astonishing pace, sometimes completing ships in a matter of weeks. 

For example, the Liberty ships — standardized cargo vessels built in massive numbers — were sometimes assembled in as little as four days. This momentum continued into the postwar years, with the U.S. maintaining a strong naval and commercial shipbuilding industry. 

According to United States Trade Representative data, in the 1960s and 1970s, the country had 13 public shipyards and at least 64 private-sector shipyards actively building large naval and merchant ships. 

At the time, U.S. shipyards accounted for about 5% of global shipbuilding tonnage, constructing roughly two dozen new ships annually.

By 1975, U.S. shipbuilders were constructing over 70 commercial ships a year, and private shipyards and repair facilities employed around 180,000 workers.

These shipyards were actively building cargo ships, tankers, container ships, drill rigs, and barges to support U.S.-flagged foreign trade and domestic industries. This momentum was fueled by strong demand across multiple sectors, including offshore oil exploration and inland waterway transportation. 

Sadly, this purple patch of US shipbuilding, mainly commercial shipbuilding, ended soon. According to experts, President Ronald Reagan and his famous Reganomics were behind it. 

When President Reagan took office in 1981, one of his early actions was to terminate funding for Titles V, VI, and XI of the Merchant Marine Act, which had provided subsidies for ship construction, operating costs, and loan guarantees for financing U.S.-built ships.

These programs had allowed American shipyards to compete against foreign shipbuilders, who were heavily subsidized by their own governments, particularly in Japan and South Korea. 

Without these subsidies, U.S. shipyards suddenly had to compete in a market where foreign competitors were receiving massive state support, making their ships significantly cheaper.

When it rains, it pours, they say. 

This was also when the offshore oil and gas boom collapsed, reducing the demand for new drill rigs and supply boats. Unfortunately, an overbuilt inland fleet led to financial strain across the industry. With the loss of subsidies and shrinking commercial demand, American shipbuilders found themselves in a crisis. 

By the late 1980s, the number of active U.S. shipyards had been slashed by 40%, and the commercial sector had all but disappeared, leaving only military contracts to sustain the remaining yards. 

With no commercial foundation, U.S. shipbuilders lost their place in the global market. According to a U.S. Navy report, between 1987 and 1992, the industry sold only eight commercial ships over 1,000 gross tons, compared to 77 ships in 1975. 

Soon, foreign competitors — especially Japan, South Korea, and later China — dominated the industry. 

Today, China is the undisputed leader in the shipbuilding industry, both naval and commercial. According to Clarksons Research data, with 51%, China is in the top spot when it comes to contribution to global commercial shipbuilding output. It is followed by South Korea at 26% and Japan at 14%. Sadly, according to the data, the United States contributes less than 1%! [Share this insight on X]

While the US’s shipbuilding industry has dwindled over the past decades, China has expanded drastically. But how did China reach the top spot? Let’s break it down for you. 

Rise of the Dragon

China’s rise to dominance in global shipbuilding is a story of aggressive industrial policy, strategic military-civil integration, and an ability to outmaneuver competitors through sheer scale.

Two decades ago, China was a minor player in the global shipbuilding industry. Today, it produces more ships than any other country and controls over 50% of global commercial ship production. 

In 2024 alone, China State Shipbuilding Corporation (CSSC) – the state-owned conglomerate – built more commercial vessels by tonnage than the entire U.S. shipbuilding industry has produced since World War II​, according to the Center for Strategic and International Studies, an American think tank based in Washington, D.C.

This sheer dominance of China’s shipbuilding industry is possible because of state subsidies and government-backed loans. The state-owned banking system fuels the shipbuilding industry with low-interest loans, direct subsidies, and bailout packages. 

For example, in 2020 alone, China EximBank funneled $10 billion into its shipyards, enabling it to offer low prices that undercut competitors worldwide, according to a USTR Section 301 investigation report. 

According to the report, these subsidies allow Chinese shipbuilders to operate at losses foreign companies simply can’t afford. Meanwhile, strategic mergers — like the 2019 consolidation of China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation (CSIC) into China Shipbuilding Group (CSG) — have created a national shipbuilding giant, fully controlled by the CCP.

So what does this mean for shipbuilding? 

This financial cushion allows China to build ships quickly and price them competitively. For example, it allows China to build ships 30-50% cheaper than competitors in South Korea, Japan, and Europe. This naturally makes shipping giants like Maersk, MSC, and COSCO turn to China’s shipyards simply because it’s the most cost-effective option.

According to a CNBC report, Maersk, the world's second-largest ocean carrier, currently builds 20% of its fleet in China and places a staggering 79% of its future ship orders with Chinese shipyards. [Share insight on X] 

French shipping giant CMA CGM is even more reliant on China. 41% of its existing fleet is Chinese-made, and 54% of its upcoming vessels will be built there. Meanwhile, German carrier Hapag-Lloyd sources 21% of its fleet from China and has placed 89% of its new ship orders with Chinese manufacturers.

And China has also expanded its control over global ports, with Chinese firms operating terminals in 96 foreign ports — a strategic move that ensures shipping companies stay tied to Chinese-built infrastructure.

It’s not just the financial dominance that has helped it reach the top spot. According to the U.S. Trade Representative investigation report, to further cement its dominance, China has weaponized overcapacity, deliberately flooding the market with more ships than demand requires. 

For example, in 2015, Chinese shipyards produced 40% more ships than the global market needed, driving down prices and forcing foreign shipbuilders into bankruptcy. South Korea and Japan, once dominant players, are way behind China because of such murky tactics. 

The reverberations were felt in the US, too. The number of active U.S. shipyards shrank, and employment in the sector dropped 15% between 2008 and 2021.

What’s even more concerning is China’s strategy of utilizing its commercial shipbuilding capabilities to expand its naval fleet. Through the Military-Civil Fusion (MCF) approach, China is allegedly channeling profits from foreign commercial orders to reduce the expense of modernizing its navy, thereby enhancing its military edge. 

According to the US Department of Defense, as of 2023, China operates over 370 battleships — just 292 for the US — with projections indicating a rise to over 435 by 2030. 

In an SASC hearing in February, Chairman of the Senate Armed Services Committee, Roger Wicker, pointed out that "China possesses a shipbuilding capacity over 230 times that of the United States.”

So, how has the United States planned to counter this?

Resurrection

To counter China’s dominance in global shipbuilding and to resurrect America’s shipbuilding sector, the Trump administration has proposed steep taxes each time Chinese-built or Chinese-flagged ships call at U.S. ports.  

According to the proposal, a fee of up to $1 million could be charged to vessels operated by Chinese interests for each port call. Similarly, vessels built in China but operated by non-Chinese entities may also face a fee of up to $1 million per U.S. port call. The exact amount will depend on the proportion of Chinese-built ships in the operator’s fleet.

Additionally, the proposal also states that companies can claim a refund of up to $1 million per entry, depending on the number of U.S.-built ships they operate at U.S. ports.

So, how are these proposals being received?

According to the World Shipping Council (WSC), which represents the liner shipping industry, these levies could impact nearly every vessel calling at U.S. ports, add up to $30 billion in annual costs for American consumers, and double the cost of shipping U.S. exports. 

The repercussions are not just monetary in nature. 

Experts warn that with fewer ships stopping at ports, more cargo will pile up at fewer docking spots, which could overload ports and delay deliveries to retailers. This congestion might disrupt supply chains, making goods more expensive, harder to find, and slower to reach consumers.

But there’s a brighter side to this as well. For example, after the announcement of proposed taxes on Chinese-built and owned container ships, CMA CGM chairman and CEO Rodolphe Saadé met with President Trump at the White House, and during the meeting, he pledged a $20 billion investment in the U.S. over the next four years.

In the high-profile meeting, Saadé told Trump, “You will have more ships with the U.S. flag as we move forward, and you can count on us to do as much as we can.”

The revival of American shipbuilding and maritime is not a one-sided effort. 

In fact, it has received bipartisan support, cutting across party lines. One of the biggest examples is the SHIPS for American Act of 2024 – Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act. 

It is a bipartisan act presented before the Senate in December 2024 to bolster the U.S. maritime industry, strengthen national defense, and enhance economic security. 

The bill supports shipbuilding, port infrastructure, and the maritime workforce to counteract decades of decline in the American fleet. One key highlight is the proposal to create a Maritime Security Trust Fund, financial incentives for shipbuilding, and strategic sealift programs to reduce dependence on foreign shipping, particularly from China. 

Additionally, the bill proposes to provide financial incentives for new ship construction, support small shipyards, expand federal financing programs, and invest in modernizing maritime infrastructure to increase the number of U.S.-built vessels.

Final thoughts 

With China dominating both commercial and naval shipbuilding, it's time for the U.S. to take serious steps toward reviving its once-thriving industry.

The creation of the Office of Shipbuilding in the White House signals that the administration is serious about turning things around. 

Additionally, the U.S. needs to rethink global partnerships. Instead of seeing shipbuilding as purely a domestic issue, the government could explore joint ventures with allies like Japan and South Korea — who are also trying to counter China’s dominance. A coalition shipbuilding strategy could allow the U.S. to scale production more effectively while also reducing reliance on Chinese manufacturing.

A stronger U.S. shipbuilding sector means more than just ships — it means high-paying jobs, economic resilience, and greater national security. The government must also carefully avoid disrupting supply chains or raising costs for everyday Americans. The path forward will require long-term investment, strategic partnerships, and a renewed focus on innovation. 

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!