Will Trump make ships great again?

Shipbuilding and maritime security will be all over the news this week. Today, the US Trade Representative will hold hearings on proposed interventions to support the US shipbuilding industry, which both the Trump administrations (and the Biden administration) believe have been unfairly hit by Chinese mercantilism. While some of the groups testifying (including a number of private businesses, foreign companies and state actors) will try to argue that the state supports being proposed by the Trump administration are illegal or unwarranted, I don’t think it will make much of a difference. Shipbuilding is where Trump will put his industrial policy stake in the ground.

Indeed, I’ve been told by sources in or near the White House that the president’s new executive order on shipbuilding may drop as early as the end of this week. (In my column today I wrote about how the administration’s efforts to build more maritime security are part of a new Great Game in the Arctic). A leaked copy of the order was floating around last week, and it includes some pretty ambitious, whole of government goals to reconnect military and commercial shipbuilding. They included beefing up training for the maritime workforce (which has dwindled in the US), penalising adversaries like China with port fees and other restrictions, and also rewarding companies and countries that support US flagged vessels and American shipbuilding efforts.

As Mike Wessel, the shipbuilding 301 case co-ordinator (and a member of the US-China Economic and Security Review Commission) told me last week, “If all the policies being discussed are implemented and durable, it would be the biggest investment and commitment to US maritime capabilities since the Liberty shipbuilding programme of the second world war.” For those readers who aren’t ship buffs, this was the public-private war effort that resulted in over 2,700 vessels being built in 18 shipyards in the US between 1941 and 1945, as part of the country’s war effort. Basically, the US built these ships faster than the Germans could sink them.

I’ve written much about the reasons why America needs to bring back shipbuilding capacity, from the need for more security in the face of Chinese and Russia aggression near US territorial waters, to America’s over-reliance on China for commercial shipping. Every day brings a new drumbeat of maritime risk. See recent headlines about Chinese warships sailing closer to Sydney as China looks to project its power in the Pacific.

But there are challenges. America recently signed an agreement with the Canadians and Finns to build icebreakers together. But amid the president’s tariff troubles with Canada, Prime Minister Mark Carney announced a $6bn Canadian deal with Australia to build Arctic radars to detect hypersonic missiles. That money might have gone to the US, but Carney is no pushover and has made it clear that Canada isn’t interested in being the 51st state. There are now calls for Canada to cancel an F-35 fighter jet order from the US.

Likewise, the new US maritime strategy, while it is bipartisan (there’s a SHIPs Act on the table that was crafted by Democratic Senator Mark Kelly and former Republican representative Mike Waltz, now the national security adviser) will also have to walk a fine line between military and labour goals. While the defence department wants as many ships in the water as quickly as possible, labour leaders — including the United Steelworkers and the other unions that brought the 301 case — want as many new jobs and as much capacity created in the US as possible.

One model for this would be the purchase of the Philadelphia shipyards by Korean company Hanwha. Another would be the outsourcing of shipbuilding to yards in places like South Korea or Japan. Unions and some security hawks worry that this won’t enhance the industrial base in the US but rather recreate some of the problems of the past 20 years of outsourcing. Either way, the US is going to need help from allies like the Finns and Koreans to retrain workers.

Industrial policy is a tricky business at the best of times. Add in Trump’s unpredictability and you have a fragile and potentially volatile scenario. Julius, my question to you is, how do you imagine America’s shipbuilding efforts will go? What opportunities and pitfalls do you see here? And do you think Trump will crack a bottle of champagne on a new US icebreaker before he leaves office?  

Recommended reading

• Lots of wonderful pieces in the FT this week: I agree with Constanze Stelzenmüller that reopening Nord Stream 2 would be absolute folly for Europeans, who should continue to move away from dependence on Russian gas. And John Thornhill’s opinion piece on the fifth estate (social media) is a must-read. The ubiquity and power of hyper-individualised, high-speed media is a fundamental challenge to our politics and economics, one we ignore at our peril.

• Meanwhile, I just finished reading When the Going Was Good, former Vanity Fair editor Graydon Carter’s memoir, and I must say that I was disappointed. As a former Condé Nast magazine person, I was drawn in by the possibility of outrageous anecdotes about the glory days of publishing. And there were some of those, but there was also just a lot of stale navel-gazing and stories about Carter’s Canadian youth that I could have done without. There was also some name calling of writers and editors which I never enjoy. The book made me feel we should all finally close this chapter of New York media history and move on.

Julius Krein responds

At this point, the American commercial shipbuilding industry is so hollowed out that the first step in rebuilding it must involve attracting foreign shipbuilders to the US. In this respect, there are parallels with the Chips Act, one goal of which was to entice TSMC and Samsung to build production facilities here. But we’re starting from an even weaker position in shipbuilding. In 2022, the United States built only five oceangoing commercial vessels, compared to 1,794 in China and 734 in South Korea. We will, therefore, need foreign companies to lay basic foundations in manufacturing process knowledge, workforce training, and so on.

The Biden administration previously identified icebreaker ships as a promising starting point, and I would expect continuity here. In addition to the geopolitical importance of the Arctic, it may be easier for the US to compete in markets for relatively specialised vessels — such as icebreakers — where price and quantity are not the only factors that buyers typically consider. 

Moreover, there are some benefits to starting from virtually zero. The need to construct new facilities is an opportunity to deploy at scale the most advanced manufacturing technologies. It should also be easier to optimise the co-location of new commercial and defence production facilities, rather than deal with stranded legacy assets. This presents an opportunity to build a larger manufacturing ecosystem that includes the adjacent technologies, supply chains and applications required for any shipyard to operate effectively.

Ultimately, however, the shipbuilding industry is a game of competitive subsidisation. The major shipbuilding nations provide considerable support to their industries, and Michael Lind has recently shown how the elimination of subsidies under the Reagan administration resulted in the precipitous decline of US shipyards despite the Jones Act.

With that in mind, US policymakers will need to consider more robust forms of investment support, in addition to the measures already announced by the Trump administration. Both shipyards and the vessels they produce provide ample opportunities for creative public-private financing structures as well as procurement and contracting mechanisms. America has somehow managed to financially engineer seemingly everything except critical national security supply chains and technologies; shipbuilding offers a chance to rectify that.

The president’s executive actions should also be supported by complementary legislation. The bipartisan Ships for America Act has already been introduced. Passing bills like this through Congress would not only put more resources behind shipbuilding efforts, but would also signal a bipartisan policy commitment — and one that is more durable than executive orders alone — to private sector investors.

Finally, on the question of allies, I would personally encourage the administration to take a more “materialist” approach to foreign policy. A core tenet of the “nationalist” perspective that drove Trump’s rise is respecting the sovereignty of other nations, rather than intervening in their internal debates to impose American values, or projecting our domestic culture wars on to them. American right-populists did not like it when Democratic administrations intervened in foreign elections on behalf of progressive parties. They should not be especially surprised, then, if interventions in the other direction end up generating hostility and blowback. Re-industrialisation in general, and shipbuilding in particular, offers an opportunity for more constructive engagement.