The Chairman of the Japanese Shipowners’ Association, Hitoshi Nagasawa, stated that the Trump administration’s imposition of new fees on Chinese-made ships entering U.S. ports will weaken China’s dominant position in the shipbuilding industry and promote the development of Japan and South Korea.
According to the Financial Times, the Japanese Shipowners’ Association represents the second largest ship-owning country globally, following only China. Chairman Nagasawa mentioned that shipowners have already begun reconsidering placing orders with Chinese shipyards and are exploring alternative options before the new U.S. fees take effect next month.
“Complete dependence on Chinese shipbuilding poses risks,” Nagasawa told the Financial Times. “A shift is inevitable, with those who previously placed orders with China possibly reducing to 60-70% and redirecting the remaining 40% to Japan or South Korea.”
China is the largest shipbuilding country in the world, accounting for approximately 70% of global new ship orders based on compensated gross tonnage (CGT), according to Clarkson Research. South Korea and Japan rank second and third, respectively.
Given the heavy reliance of the global shipping industry on Chinese ships, commercial shipping is considered a crucial leverage that Beijing can manipulate. Any disruption to this system, whether accidental or deliberate, could lead to supply chain disruptions, a risk that the U.S. aims to avoid.
Starting from October 14th, the Trump administration plans to levy high port fees on Chinese-made vessels entering the U.S., aiming to expedite global shipping industry adjustments. The specifics of the policy include initial rates of $18 per net ton or $120 per TEU (twenty-foot equivalent unit) for non-Chinese shipping companies using Chinese-made ships, with gradual increases to $33 per net ton or $250 per TEU by 2028. For Chinese-owned or operated vessels, the U.S. will charge $50 per net ton initially, with a maximum of five times per ship per year, increasing to $140 per net ton by 2028.
The policy of imposing new fees on Chinese-made ships by the U.S. benefits Japan and South Korea. Nagasawa noted a significant increase in inquiries to Japanese shipyards. He mentioned that the U.S. imposition of port fees on Chinese-made ships presents an opportunity for Japan. Global shipping companies will monitor shifts in Chinese orders for a period. Some orders may shift to South Korea, but Japanese shipyards will also see an increase in orders. If this trend extends to related industries, it could create an economic cycle favorable to Japan.
Nagasawa also emphasized that the U.S. is becoming more cautious when realizing its heavy reliance on Chinese ships for trade. The revitalization of the U.S. shipbuilding industry is driven by the belief that essential goods for a country should be domestically sourced to a certain extent.
Trump’s actions could potentially aid Japan’s plans to revitalize its shipbuilding industry. While Japan once held the title of the world’s largest shipbuilding industry, it currently lags behind China and South Korea. Japan has proposed establishing a $7 billion fund to upgrade and expand its shipyards.
Nagasawa believes that South Korea has a larger scale and thus more capacity to invest in Trump’s shipbuilding initiatives, but he sees potential for Japan to provide services for the U.S. Navy vessels and collaborate on icebreakers. As part of a trade agreement, the shipbuilding industry was identified as a critical sector in Japan’s $55 billion investment plan in the U.S. reached in July.
On July 11th, during a trade negotiation forum, Chang Sung-gil, Director of Trade Policy of the Ministry of Industry, Trade and Resources of South Korea, expressed that the U.S. views Korea as a strategic partner in countering China’s shipbuilding industry and has raised concerns about China’s growing market share in shipbuilding. Future U.S.-Korea shipbuilding cooperation may involve requests for Korean companies to reduce the use of Chinese materials to counter China.
On August 25th, during a meeting with South Korean President Moon Jae-in, U.S. President Trump reached a consensus on shipbuilding cooperation.