Trump’s Shipbuilding Ambition Risks Backfiring on His Big Deal

The Trump administration’s renewed pressure on China’s shipbuilding and maritime shipping industries offers yet another vivid testament to its enduring commitment to U.S.–China competition. These latest initiatives—confusing port fee policies with heightened national security rhetoric—reveal a trajectory where geopolitical anxieties have eclipsed economic pragmatism. Given the administration’s historical grievances toward globalization, its enthusiasm to compete with China, and its willingness to destabilize norms, such a strategy is unsurprising. Yet by heavily securitizing a once-commercial rivalry, President Trump not only unsettles the international order but also erodes the fragile foundations of U.S.–China relations. At a moment when tariffs had already driven ties to a new historic low, turning shipbuilding into a security flashpoint ensures that meaningful dialogue remains a distant prospect.

While the latest measures trace procedural origins to the Biden administration’s Section 301 investigations, the Trump administration has significantly expanded their scope. What began as an effort to address China’s maritime dominance has been reimagined through a security lens. President Trump now frames maritime commercial capabilities as pillars of national security. The President vowed to resurrect both the U.S. commercial shipbuilding and military shipbuilding industries as an effort to “boost our defense industrial base”. This reframing elevates a commercial rivalry into a full-fledged security confrontation, reflecting a longstanding trend in Trump’s economic policymaking—where geopolitical rivalry increasingly replaces pragmatic economic calculations.

President Trump’s securitized shipbuilding strategy proves disruptive in two ways. First, like his tariffs, these measures risk destabilizing the global shipping supply chain, which remains deeply intertwined with Chinese capabilities. Injecting geopolitical considerations into shipping operations adds cost and uncertainty, undermining efficiency and raising consumer prices. Second, the administration’s shift from targeting unfair trade practices to suppressing the origin and ownership of ships marks a profound departure from international trade norms. This vessel-oriented approach prioritizes symbolic action over substantive market reforms, compounding global trade disruptions while offering little realistic prospect of revitalizing U.S. shipbuilding.

The newly announced port fee regime exemplifies these disruptions. According to the World Shipping Council, Chinese-operated vessels could face up to $3.75 million in fees per voyage, with escalating penalties over time. By taxing based on ownership rather than behavior, the fees inject major costs into global shipping, burden U.S. ports, and risk fueling domestic inflation. More critically, this framework departs from established trade practices, undermining international norms without offering a credible path toward rebuilding American shipbuilding capacity.

Meanwhile, President Trump’s parallel strategy—imposing fees and restrictions to “send a demand signal” to U.S. shipbuilders—is similarly unrealistic. America’s shipbuilding decline reflects the broader fading of U.S. manufacturing, rooted in structural economic shifts since the Reagan era. Decades of outsourcing and a pivot toward services hollowed out industrial capacity, leaving shipbuilding as a casualty of systemic transformation rather than foreign competition. Reversing such trends requires sustained investment, workforce development, and long-term national commitment (in other words, to “Out China” China) —none of which seem feasible amid persistent deficits, soaring debt, and political polarization. In this environment, external fees amount to symbolic gestures rather than viable industrial strategy.

Facing these internal weaknesses, the Trump administration may consider turning towards allied capital, encouraging investments in the similar form as the investment of Nippon Steel in U.S. Steel. That said, relying on allies exposes new strategic vulnerabilities. With South Korea and Japan virtually the only U.S. allies with major shipbuilding industries, the President’s strategy grants them leverage in trade negotiations. Moreover, the fundamental question is: As a President who has repeatedly expressed skepticism towards alliance and globalization, can he again put his strategically important shipbuilding industries to America’s two Asian allies’ hands just to reshore away from China?

Recent reports highlight how South Korea is seeking to leverage its shipbuilding prowess to seek relief from U.S. tariffs. “Since President Trump and his administration have expressed big interest in cooperation in shipbuilding, it will become a very important negotiating card for us,” South Korea’s trade and industry minister noted. This dynamic complicates U.S. objectives: any shipbuilding cooperation inevitably involves political and economic concessions, entrenching dependencies rather than restoring self-sufficiency. Even with full allied support, Japan and South Korea cannot fully replace America’s reliance on Chinese-built vessels, rendering Trump’s decoupling ambitions diplomatically risky and practically implausible.

President Trump’s shipbuilding ambition and his controversial policies mirror his broader tariff war with China: an aggressive effort that, whether intentional or not, accelerates the “de facto decoupling” between the United States and China. From a diplomatic perspective, however, this approach is far from pragmatic. Trump’s recent attempts to portray progress in tariff negotiations with Beijing—asserting in interviews that talks were underway—have been swiftly contradicted by China, which publicly denied any consultations were taking place. The Chinese Foreign Ministry bluntly stated that “the U.S. should stop creating confusion,” further exposing the credibility gap plaguing Trump’s diplomatic efforts.

This pattern of mixed signals underscores a fundamental contradiction. On one hand, President Trump appears eager to de-escalate tariff tensions with China, hoping for breakthroughs to mitigate the economic fallout from his aggressive trade policies. On the other hand, initiatives like his shipbuilding ambitions—and his broader strategic emphasis on naval competition—reinforce Beijing’s perception that Washington lacks genuine intent to negotiate. By continuing to escalate security-driven competition, President Trump effectively hardens China’s skepticism, making any substantive deal even more elusive.

The diplomatic cost of this approach is mounting. Beijing increasingly views President Trump’s outreach as little more than bluffing—an impression deepened by repeated public claims of dialogue that are immediately disavowed by Chinese officials. In the specific case of shipbuilding, the President’s framing of the industry as a linchpin of strategic rivalry, rather than a domain for economic collaboration, reinforces a confrontational dynamic that leaves little room for pragmatic compromise. Ultimately, rather than drawing China back to the negotiating table, President Trump’s aggressive posturing only amplifies mutual distrust, complicating efforts to stabilize the relationship and pushing the prospect of meaningful engagement further out of reach.