Energy Musings - April 16, 2026

Revitalizing the U.S. maritime industry is gaining some momentum as the administration reveals specific actions. We are also getting more suggestions for steps the industry and government can take.

Details Added To America’s Maritime Action Plan

When the Trump administration published America’s Maritime Action Plan (MAP) in February, it said that more details would be announced in conjunction with its budget proposal later in the spring. On April 3, the White House released its proposed fiscal 2027 budget, which included details for several proposals originally outlined in the MAP. We have also learned about another aspect of the plan, but more on that later.

A quick refresher about the MAP: it is built on four key actionable pillars.

· Rebuild U.S. Shipbuilding Capacity and Capabilities

· Reform Workforce Education and Training

· Protect the Maritime Industrial Base (MIB)

· Emphasize National Security, Economic Security, and Industrial Resilience

Under each pillar, numerous specific actions are suggested to ensure that each objective is achieved. However, the rationale for the Trump administration’s plan was outlined in the second paragraph of the MAP Introduction authored by Secretary of State Marco Rubio and Russel Vought, Director of the Office of Management and Budget. They wrote:

“Less than one percent of new commercial ships are built in the United States. With only 66 total shipyards—consisting of eight active shipbuilding yards, 11 shipyards with build positions, 22 repair[s] yards with drydocking, and 25 topside repair[s] yards—the United States does not have the capacity necessary to scale up the domestic shipbuilding industry to the rate required to meet national priorities. Strategic competitors, meanwhile, dominate the market and build ships at a fraction of the cost of U.S. production. This status quo poses significant security and supply chain dependency issues. A self-sustaining domestic shipbuilding sector is critical for national and economic security. The United States can neither afford for its trade to and from foreign markets to be ferried almost entirely on foreign-built, -crewed, and -flagged ships, nor for the MIB to be unable to build and maintain the vessels the United States needs to defend American interests on the high seas. The Trump Administration seeks to reconstitute those means here.” (Emphasis added.)

Since we have already written about the MAP (February 16, 2026), we will not dwell on the plan’s details. Rather, we would point out that an overriding consideration was “calls for policies that modernize government procurement processes and streamline regulations to accelerate shipbuilding and reduce costs.” These actions are necessary if the U.S. shipbuilding industry is to be revitalized and more competitive on the global stage. This will require significant capital investment, creative thinking about how to build ships more efficiently, and staying power, since the recovery will require years and financial losses in the early years.

What specific MAP plans were highlighted in the White House budget document? The government suggests that “the Budget invests in the revival of America’s industrial base and the strengthening of national security by providing increased resources for domestic shipbuilding.” The specific actions to be implemented are listed under the budget submissions of the respective government departments.

Under the Department of Transportation:

• “Implementation of DOT Programs under the Maritime Action Plan (+$1.5 billion). The Administration recognizes the urgent need to reinvigorate the U.S. shipbuilding and maritime industries, which are vital to growing the United States role in the global Maritime Transportation System. To this end, the President signed Executive Order (E.O.) 14269, ‘Restoring America’s Maritime Dominance,’ which calls for a comprehensive Maritime Action Plan to reestablish U.S.-flagged and U.S.-built commercial shipping competitiveness, to rebuild America’s maritime industrial base, and to recruit and train the domestic maritime workforce. In support of this plan, the Budget proposes $500 million for Port Infrastructure Development Program grants, $550 million for the United States Merchant Marine Academy’s Campus Modernization Plan, $355 million for Small Shipyard and Commercial Shipbuilding Infrastructure Grants, and over $100 million for new workforce development and innovation programs. In addition, the Budget proposes to establish a new Maritime Security Trust Fund that would provide consistent, predictable, and durable funding for maritime support programs alongside annual discretionary appropriations.”

Under the Department of Homeland Security:

• “U. S. Coast Guard Operations (USCG) ($12.5 billion). The Budget includes an increase of $2.1 billion for USCG operations to transform and expand the Service, consistent with the Agency’s Force Design 2028 initiative. WFTC provided a historic $24.6 billion investment in the Agency’s assets and infrastructure, and the Budget prepares the USCG to operate these new assets by investing in the military workforce necessary to man new vessels and aircraft.”

Finally, under the Department of War:

• “Restoring America’s Maritime Dominance. The Administration has pursued a whole-of-Government and whole-of-Nation approach to strategically recapitalize the maritime industrial base. As part of this strategy, the Administration surveyed and identified shipbuilding requirements across DOW and in the Departments of Homeland Security, Transportation, Commerce, and the Interior, and the National Science Foundation to efficiently allocate resources. This builds upon the successes of WFTC to recapitalize the entirety of the Government fleet and would ensure the maritime industrial base strengthens its ability to construct ships quickly and meet the demands of the Nation.

• “Shipbuilding. The Budget requests $65.8 billion in shipbuilding funding to procure 18 battle force ships and 16 non-battle force ships. The Administration is prioritizing ways to improve the procurement and delivery of the full range of vessels needed to engage adversaries and support DOW operations. As waters around the world become increasingly contested, it is imperative that the United States be able to efficiently deliver the various naval platforms it requires, including both battle force and auxiliary vessels, to ensure maritime domain awareness and deterrence. The 2027 Budget establishes President Trump’s Golden Fleet, including initial funding for the Trump-class battleship and next-generation frigates. The Budget would maintain or increase the procurement of existing battle force platforms, including amphibious vessels, and Columbia-class and Virginia-class submarines. The procurement of needed auxiliary platforms would be expanded, including strategic sealift vessels and hospital vessels. Consolidated Cargo Replenishment at Sea tankers, a special mission ship, submarine tenders, and other vessels vital for logistics. The repair capacity of public shipyards would be increased, while improved production across the fleet would help address delays and ensure the timely delivery of vessels.”

(We were somewhat surprised at the number of misspellings in the text, which we have corrected but not noted.)

This was a good start, but not as complete an action plan as will be needed. The Trump administration is committed to allocating funds from its budget to help revitalize the maritime industry and accelerate the delivery of newbuild naval and, hopefully, commercial vessels. A significant initiative will be the establishment of the Maritime Security Trust Fund, which will collect funds from foreign ships making calls at U.S. ports to deliver and receive cargoes, to be used to finance the maritime industry’s revitalization. This is the revival of a subsidy program to support domestic commercial shipbuilding that was officially abandoned during the Ronald Reagan presidency in the early 1980s, and which accelerated the atrophy of the maritime industry.

At that time, the Berlin Wall had fallen, and the Soviet Union, our primary adversary, had collapsed. The Cold War was over, and the government cut defense spending while urging defense contractors to consolidate and cut costs to compete for the limited defense dollars that would be available in the future. The era of global trade began, and a reality people failed to understand was that the global shipping industry carried 90% of global trade. By ignoring the reality that the U.S. was no longer a significant ship builder, we were destined to become dependent on foreign vessels to handle our imports and exports.

The shipbuilding expertise of U.S. shipyards, gained during World War II, enabled the U.S. to remain a significant shipbuilder in the early post-war era. We exported that skill to Korea and Japan, as we assisted them in their economic rebuilding following the end of the Second World War and the Korean War. However, at home, we allowed this expertise to atrophy, from neglect rather than a conscious strategy. The lifeblood of the shipbuilding industry had been the flow of subsidy money, and without it, the high cost of U.S. ships guaranteed that our market share would shrink.

The demise of the Reagan subsidy set the U.S. shipbuilding industry on a path to focusing exclusively on naval shipbuilding, as domestic shipowners could purchase cheaper new vessels abroad. And they did.

Ship construction and operating subsidies have been a feature throughout the U.S. shipping industry’s history. At times they were lucrative, while at other times they were reduced. The pace of shipbuilding reflected the ebb and flow of the subsidies. Whenever a debate over shipbuilding subsidies occurred, their role in our national economic prosperity and national security interests was acknowledged.

Critics of the Trump MAP point out that the problems of U.S. shipbuilding are structural and will not be solved by tariffs or by taxing foreign rivals (i.e., subsidies). A new paper by Mohamed Moutii, a Research Associate with the Arab Center for Research, was published by the American Institute for Economic Research. “Can Trump’s Maritime Plan Save America’s Struggling Shipyards?”

The paper begins by attacking the port call charges, showing how, for containerized imports, the fees could add $2.1 or more than $52 billion to the cost of the goods arriving in the U.S. Since the fees are weight-based rather than value-based, they will have a disparate impact across industries, a concern of the author. With port fees, the American consumer will pay higher prices for goods.

Reportedly, major shipping companies have said port fees will force them to reduce stops at smaller American ports, favor larger ports, or reroute cargo through Canada and Mexico. The latter attempt to deliver ship cargo overland is a target of the fee plan, which bans such tactics.

Moutii cites cost differences in building various ship classes in U.S. yards versus foreign yards. He declares: “The industry’s decline is structural, not temporary – and far too deep to be reversed by mandates or subsidies alone.” He identifies labor, infrastructure, and a weakened supplier base as further arguments why the structural challenges are the realities facing the domestic shipbuilding industry. He ends his paper with “Reviving American shipbuilding will require confronting these realities – not repeating a century of failed protectionist policies.”

Having identified the structural realities facing the U.S. shipbuilding industry, something widely acknowledged, we were disappointed that Moutii dismissed the administration’s efforts to overcome them. Fifty to eighty years of neglect cannot be corrected overnight. Just as the Trump administration has worked to revive domestic manufacturing, especially in sectors critical for the nation’s security, it is attempting to put shipbuilding on an upward path because it recognizes the critical role it plays in our national security. Better ideas are welcome, but merely criticizing the action is unhelpful.

The Center for Maritime Strategy just issued a more valuable report, “PIER REVIEW: Leveraging the Allied Maritime Industrial Base for U.S. Shipbuilding. The report noted that “Many of the United States’ maritime allies are experiencing similar threats to their domestic shipbuilding industries, including labor shortages, outdated shipbuilding technology and infrastructure, inefficient processes for designing and building ships, disjointed government-commercial relations, and supply chains that are becoming increasingly vulnerable to disruption.”

Therefore, the report authors believed that examining the policies of America’s maritime allies would be instructive in identifying the most successful ones. The report presents case studies of five diverse maritime allies of the United States. The five allies included: South Korea, Italy, Canada, Sweden, and the United Kingdom. The study concluded that “South Korea and Italy have successfully maintained strong commercial and naval shipbuilding sectors, Canada and the United Kingdom have largely allowed their commercial sectors to atrophy while primarily focusing on warship construction, while Sweden has seen both sectors significantly diminish and maintains only marginal naval shipbuilding capabilities.” That is not a particularly good outcome, but the study of each nation’s maritime industry led to a series of recommendations.

The recommendations are designed to capitalize on the “insights from its allies to support its MIB (maritime industrial base) while embracing greater multilateral cooperation in the maritime domain.”

The CMS recommendations for reviving the U.S. maritime industry.

The lessons learned include starting at the beginning of the process and getting the ship design right before starting construction. New naval ship classes have been plagued by the government rushing the process, only to find they needed to make significant design changes that not only slowed the process but also added costs by requiring a redo of work already completed. Adapting digitalization and AI in the design and construction of ships will be a must. It reflects the Trump administration’s obsession with winning the AI race because the productivity benefits can be substantial, boosting U.S. economic growth and helping address the perennial labor shortage. Finally, the U.S. maritime industry should work more closely with our allies to leverage their expertise.

This theme was carried forward in a recent interview with Maritime Administrator Stephen Carmel with TradeWinds, a maritime publication. Carmel, a longtime shipping executive, wants MARAD to become forward-looking rather than to reflect the status quo.

In the interview, Carmel demonstrated the critical rethinking of our maritime industry required for its revival. He noted that no country had become a maritime power by operating within a system designed by someone else. Instead, they became dominant by changing the system.

To demonstrate success, he referenced the SS Savannah, the first steam-powered vessel to sail the Atlantic Ocean. He told TradeWinds, “The system innovation really happened the year before, which was 1818. Black Ball Line formed, and the innovation there was sailing on a fixed schedule, whether there was cargo or not, and that was the founding of liner service.. That was truly revolutionary. That changed the way the maritime system worked.”

The woeful state of the U.S.-flag fleet.

Carmel named nuclear propulsion as the type of systemic change shipping may need. Small modular reactors under consideration for the shipping industry do not represent a major technological challenge, he said. The difficult part is creating a system to be built around operating nuclear vessels. That means gaining port acceptance, proper insurance, and regulatory regimes.

Although nuclear-propelled ships would be expensive on an individual basis, the economics may change if they are part of a network. He elaborated, “To me, where it has the most potential viability is in a network where you’re running a string of seven or eight ships in a network.” With no daily fuel cost, and ships that can run faster, delivering the same volume of cargo with fewer ships improves the network’s economics. An exponentially cheaper network is how it pays for itself, said Carmel. “I do think that this is every bit as potentially transformative as back to steam was in the 19th century. It’s just going to take a little time to work it out.”

With China working to develop nuclear-powered merchant vessels, the first mover will get to set the industry standards. “And so, in many respects, the SMR competition is not a competition about propulsion. It’s a competition about who gets to set the standards,” Carmel said.

Carmel also told Trade Winds that while the U.S. maritime policy debate focuses on building ships, there should be greater attention paid to generating a steady flow of cargo for them. Shipowners will always tell you that their business case for new ships is built on two guarantees: cargo and adequate fuel. Without them, it is impossible to operate.

A new U.S. Maritime Preference Requirement is making its way through the federal government’s interagency review process. Conceptually, high-volume exporting countries would need to increase the percentage of their cargoes on U.S.-flag ships gradually. The specifics of the plan have not been revealed, but Carmel said, “There’s a combination of sticks and carrots. What we hope is that the carrots are enough, but if not, there’ll be sticks there too.”

It is encouraging that ideas for revitalizing the domestic maritime industry are beginning to be floated. Not every proposal will succeed. However, they will involve mandates and subsidies in one form or another. Without them, shipbuilders and shipowners will be reluctant to invest, knowing that their vessels could become financial disasters. As part of the process, a rethinking of the Jones Act should be included. Reform is needed, not repeal or the status quo. This is a major potential political battle, but the act’s policies need to be re-evaluated after 120+ years of existence and in light of the dramatically changed shipping world.