The U.S. Maritime Administration’s Maritime Security Program Fleet is important to our national defense in times of conflict and national emergencies. Now it’s future hangs in the balance. This fleet, operated by members of the World Shipping Council and consisting of U.S. flag merchant ships, is integral to international trade. The Trump administration is intensifying the attack on a multilateral, globalized, economic and trade war. To help do this, they’re establishing a new White House office dedicated to increasing domestic shipbuilding. The administration’s latest proposal would penalize Chinese-built ships docking at U.S. ports with enormous targets. Taking this action would have an enormous positive effect on the shipping industry and our nation’s economy.
The suggested tariffs on Chinese-built boats are really just a way to protect American shipbuilders. This important step will decrease our nation’s dependence on foreign-built vessels. These measures have created alarm among industry stakeholders. The Agriculture Transportation Coalition (AgTC) points out that there are currently no U.S.-built vessels capable of handling international commercial shipping for agricultural products. This gap highlights the challenges inherent with aligning our domestic shipbuilding security goals. At the same time, the global trade market continues to be flooded with Chinese-built container ships.
For example, container vessels servicing the United States typically visit three to four U.S. ports on each round trip. Proposed penalty amounts can create extreme monetary hardship on ocean carriers. Currently, the U.S. Trade Representative is conducting hearings on what the potential penalties should be. These fines could amount to between $1 million up to a shocking $3.5 million per port for every single voyage. According to the World Shipping Council, before long, these regulations might affect 98% of all liner vessels entering U.S. ports. We believe this change will have serious damaging effects throughout the industry.
"The proposals will result in increased costs for U.S. exporters and consumers as well as supply chain inefficiencies, while failing to provide China with effective incentives to alter its acts, policies, and practices," stated Joe Kramek, president of the WSC.
According to the U.S. Department of Transportation Maritime Administration, the United States only has 182 flagged ships at home. This number comes from looking at more recent data. The U.S. liner shipping industry is vital to our economic health. It drives more than 6.4 million American jobs and generates more than $1.1 trillion in U.S. gross domestic product. The effect of the proposed levies on this nascent industry has stakeholders sounding the alarm.
"The nation's agriculture exporters are united in concern and opposition to the proposal," expressed Peter Friedmann, executive director of the Agriculture Transportation Coalition.
The Trump administration will establish a new White House office of shipbuilding. This office will work out special tax incentives to stimulate domestic ship production. Such actions would help spur economic development in a beleaguered U.S. maritime industry. They run counter to existing market realities, as almost all container traffic walks on ships built in China.
"A revitalization of the U.S. maritime industry would be very positive," commented Joe Kramek of the WSC.
Nate Herman, senior vice president of policy at the American Apparel & Footwear Association, highlighted potential adverse effects on the economy:
"We are already in an inflationary economy. Americans cannot afford further price increases and product shortages. And American manufacturers and farmers cannot afford to lose more export markets."
A new vessel shouldn’t last less than 20-30 years. This underscores the deep long-term commitment involved with investing in new ships. Unfortunately, longer-term solutions look just as elusive. We need to not only match our peer competitors’ maritime improvements and international trade route competiveness, but get ahead.
"If they were available at a reasonable cost, U.S. exporters, including agriculture, would already be using this option," noted Peter Friedmann.
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