USTR: China’s dominance of global shipbuilding warrants U.S. action

United States Trade Representative (USTR) Ambassador Katherine Tai: “The petition presentThese findings under Section 301 set the stage for urgent action to invest in America and strengthen our supply chains.” [Image: AAM]

This won’t come as a surprise to anyone who actually read the full petition filed by U.S. unions back in March 2024, (see our earlier report) but U.S. Trade Representative (USTR) Ambassador Katherine Tai has found that China’s targeting the maritime, logistics, and shipbuilding sectors for dominance is actionable under Section 301 of the Trade Act of 1974

Section 301 is a key tool used by the United States to address unfair trade practices and enforce international trade agreements. It grants the office of the U.S. Trade Representative the authority to investigate and take action against foreign countries that violate trade agreements or engage in practices that unfairly burden or restrict U.S. commerce.

“Today, the U.S. ranks 19th in the world in commercial shipbuilding, and we build less than fiveships each year, while the PRC is building more than 1,700 ships. In 1975, the United States ranked number one, and we were building more than 70 ships a year,” Ambassador Tai said. “Beijing’s targeted dominance of these sectors undermines fair, market-oriented competition, increases economic security risks, and is the greatest barrier to revitalization of U.S. industries, as well as the communities that rely on them. These findings under Section 301 set the stage for urgent action to invest in America and strengthen our supply chains.”

• The determination is supported by a comprehensive report, which is available here.

USTR’s investigation found the PRC’s targeting for dominance unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition and creates dependencies on the PRC, increasing risk and reducing supply chain resilience. The PRC’s targeting for dominance is also unreasonable because of Beijing’s extraordinary control over its economic actors and these sectors.

USTR further found that PRC targeting for dominance burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.

As the petitioner U.S. unions have highlighted, the entrenchment of the PRC’s dominance means that U.S. international trade is “carried out on vessels made in China, financed by state-owned Chinese institutions, owned by Chinese shipping companies, and reliant on a global maritime and logistics infrastructure increasingly dominated by China.”

The results of this investigation provide a basis for finding that responsive action is appropriate. “Any determination on responsive actions would be considered in the next stage of the investigation,” says the USTR.

The original petition for relief filed by the unions called for remedies that included levying a port fee on Chinese-built ships calling U.S. port