Another U.S. sidewinder to global trade

Opinion

Hey there, time traveller!
This article was published 28/02/2025 (208 days ago), so information in it may no longer be current.

In the current wild world of American politics and its effect on the rest of the world, some things get a ton of press.

Take U.S. President Donald Trump’s plan to create an uber version of the U.S. immigration green card, something he describes as a “gold card” where prospective immigrants to the U.S. could pay US$5 million for instant legal immigration to the United States.

But there are also all sorts of American actions that promise to cause radical changes in the world economy that we are barely hearing about.

Take shipping, for example.

A week ago, the U.S. Federal Register published a 13-page plan outlining how the American government expects to deal with China’s control of deepwater shipbuilding.

The plan is in response to an investigation started into shipbuilding under the Biden administration in 2024. Chinese shipbuilding, the investigation found, has grown from five per cent of the world’s vessels to over 50 per cent in 2023, primarily because of Chinese government subsidies and preferential treatment for Chinese shipbuilders. The influx of vessels is squeezing out private sector international shipbuilding firms — as the report points out, U.S. shipyards built 70 ships in 1970, but are down to just five vessels per year now.

China currently owns 19 per cent of the commercial world fleet, and also controls other portions of the shipping ecology, including production of 95 per cent of the world’s shipping containers, the investigation found.

The plan the Trump administration has put forward to deal with the issue is downright startling.

The plan is to require Chinese-built or Chinese-owned vessels to pay port fees of up to US$1.5 million every single time they enter an American port. The fees would apply to Chinese shipping companies, as well as companies that use Chinese-built ships, and even companies that have ordered ships from Chinese shipyards. Some estimates suggest the fees would total as much as US$11 billion — a year.

A column by the Cato Institute, a right-wing American think tank, called the investigation “deeply flawed” and the new fees “madness,” pointing out that for an average Chinese-built vessel visiting two American ports to drop off cargo, the increased fees would amount to US$780 — per container — and that the American consumer would end up picking up the cost.

But the plan to bolster American shipbuilding doesn’t end there.

The plan also requires companies exporting goods by sea from the U.S. to use U.S.-flagged, U.S.-owned ships for at least part of their exports, an amount that will increase over the next seven years and eventually require the use of U.S.-built vessels.

Critics point out that the U.S. shipbuilding industry can’t possibly scale up to meet that kind of demand for new U.S.-built vessels in such a short time frame, and that it would be impossible to find American crews for the vessels anyway.

For Canada, there might be a silver lining. The new costs would make the idea of shipping through Canadian ports like Prince Rupert and Vancouver much more attractive — if it wasn’t for the fact that Vancouver is slow, overburdened and a bottleneck on the Canadian supply chain already.

Bulking up Vancouver’s capacity could be a strategic investment — if America’s disruptor-in-chief doesn’t just go wildly off in some other direction long before a port upgrade could be completed. You have to imagine that, if Chinese ships did make an end-run around U.S. ports through Vancouver and into the U.S. by Canadian rail, it wouldn’t take long for there to be a new set of fees somewhere else.

Remember the old curse “May you live in interesting times?”

Enough already.