Are U.S. Policies Eroding China’s Dominance in Shipbuilding

Washington's concerns about China's shipbuilding industry are not just rooted in economic competition. National security threats are also at play. As part of its national Military-Civil Fusion strategy, China has deeply intertwined its commercial and naval shipbuilding ambitions. Several of CSSC's shipyards, which are among China's most prolific commercial shipbuilders, simultaneously produce advanced new warships being commissioned into China's navy.

In recent years, U.S. policymakers have proposed major efforts to address these concerns and right-size the industry. The Office of the U.S. Trade Representative (USTR) is poised to impose a set of punitive fees targeting global shippers that operate Chinese-built ships in their fleets. The fees are the outcome of a year-long Section 301 investigation, initiated in 2024 by the Biden administration. The probe determined that "China's targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable and burdens or restricts U.S. commerce."

The final measures are not set to take effect until October 14, 2025, but the USTR's investigation and the broader policy activity surrounding it have already coincided with visible movement in global ship ordering patterns.

Shipbuilding data analyzed by CSIS from S&P Global shows that new orders at Chinese shipyards spiked dramatically in the months after USTR announced its Section 301 investigation in April 2024. Over 75 percent of new tonnage ordered globally in the second half of 2024 went to Chinese yards. While shipbuilding is a cyclical industry-meaning order volumes naturally rise and fall with shifting market conditions and investment cycles-the timing of this surge suggests that U.S. policy announcements likely factored into buyers' decisionmaking. Shipowners appeared eager to lock in contracts at Chinese yards before potential restrictions took effect, pulling demand forward.

This spike was followed by a significant drop in early 2025 as the market readjusted. China's share of all new orders by volume fell below 50 percent in January, its lowest monthly reading since September 2023. Notably, the collapse of orders at Chinese yards began before the USTR's investigation was complete, suggesting that the market was already cooling off, likely due to capacity constraints and glutted order books after the surge in orders in the preceding months.

Purchases of Chinese-built ships plunged further after the USTR's February 2025 determination that China had employed nonmarket practices, and its announcement of a series of proposed remedies, including a new docking fee regime targeted at penalizing shipping firms that operate Chinese-built vessels.

Between March and May 2025, Chinese shipyards accounted for less than 30 percent of new orders, reflecting a dramatic slowdown in new purchases as companies assessed the impacts of the USTR's proposed actions and broader ongoing disruptions to global trade.

Notably, orders at non-Chinese yards-mostly in Japan and South Korea-stayed roughly consistent with their normal rates during this period, suggesting that the drop in order volume was concentrated in China rather than reflecting a collapse in overall global demand. This provides additional evidence that the USTR's impending penalties on companies operating Chinese-built ships were likely a significant factor, beyond expected cyclical volatility and uncertainty caused by the Trump administration's tariff-driven disruption to the global economy.

A Return to Business as Usual

These trends suggest that the USTR's policy announcements had some initial impacts on China's share of new ship orders. However, more recent data suggests that these effects may have been temporary. By summer 2025, China's share of global orders began to recover, ticking back up to above 65 percent in June and up to 84 percent by August.

This aligns with statements and actions by leading shipping firms like Maersk, MSC, and CMA CGM, indicating that the impending USTR fees, as currently structured, are unlikely to impact their order behavior. Since the USTR's April 2025 announcement of the fee regime, MSC alone has placed twelve new orders for massive containerships, accounting for about 22 percent of orders (by tonnage) at Chinese yards from April through July.

Looking ahead, the trajectory of U.S. shipbuilding policies will depend not only on the USTR's docking fee regime but also on key bipartisan legislation working its way through Congress. The SHIPS for America Act, which was introduced in December 2024 and reintroduced with changes in April 2025, proposes a fee structure that differs significantly from the USTR's approach. Whereas USTR's plan levies uniform penalties on global shippers operating Chinese-built vessels, the congressional bill would close some loopholes that enable firms to sidestep the USTR's measures, and it would target China's dual-use shipyards by imposing higher fees on ships built at yards owned by CSSC, the "leading force" behind China's naval modernization.

Notably, shipping companies do not yet seem deterred by the SHIPS for America Act and its higher fees on CSSC-made vessels. In the first eight months of 2025, CSSC-owned shipyards brought in over 40 percent of the orders going to all Chinese shipyards, which is at or above the level seen in previous years.