This investigation threatens to impose new fees on foreign ships using U.S. ports - some as high as $270,000 per voyage.

This law enforcement action, although intended to be tough on China, will only harm U.S. exporters.

To understand why, consider the so-called roll-on/roll-off ships (also known as "ro-ros"), which transport cars, trucks, tractors and construction machinery. They carry nearly half of the U.S. auto exports. Over 90% of new ro-ro ships are built in China. There is no other fleet available.

Charging hefty usage fees will not revitalize U.S. shipyards. It will only increase costs for Detroit, Caterpillar and John Deere, jeopardizing thousands of American jobs tied to sales of these companies and others overseas.

The Trump administration claims the Section 301 investigation targets the shipbuilding industry. In reality, its purpose is to tax U.S. exporters at the docks.

Exports of liquefied natural gas (LNG) will be hit even harder. The U.S. is currently the world's largest LNG exporter, with annual LNG exports reaching $34 billion. LNG contributes more to the U.S. GDP than corn or soybeans. It is also a key part of U.S. energy diplomacy, providing an alternative to Russian gas for allies from Europe to Asia.

The proposal requires that LNG be transported by vessels built in the U.S., flying the U.S. flag, and operated by U.S. crews. The problem is that the U.S. has not built an LNG carrier since the 1970s. No shipyard has the drydocks or workforce of such scale to build these ships. Such ships simply do not exist - and they won't exist in the near future.

This regulation is not only impossible to achieve, but it will also undermine long-term contracts, hinder U.S. exports, and hand over strategic energy markets to competitors.

This will result in fewer domestic drilling, refining and shipping jobs, which runs counter to the Trump administration's stated goal of "releasing American energy."

Since President Trump's first term, U.S. LNG exports have grown significantly. This made the U.S. the world's largest LNG exporter in 2023. The Trump administration has already shown that promoting U.S. LNG exports and domestic jobs is a top priority of its energy dominance agenda, as Trump immediately lifted the Biden-era pause on LNG export licenses in January.

Additionally, the U.S. Department of Energy announced in June a landmark agreement with Tokyo-based Japanese energy company JERA, pledging to sign several 20-year LNG purchase agreements. Therefore, conducting a Section 301 investigation would weaken these key economic advances of the U.S. and our international standing in the process.

Furthermore, there are legal issues. Section 301 is meant to combat unfair foreign trade practices, not to reshape U.S. industrial policy by penalizing foreign vessels.

Using Section 301 in this way distorts its purpose and sets a dangerous precedent. If the shipbuilding industry can be included under Section 301, then any U.S. industry lagging behind global competitors could be included. This is not targeted enforcement, but old-fashioned protectionism in a new guise.

Congress enacted Section 301 to address discriminatory trade barriers, not to penalize U.S. exporters for the unacceptable fact that the U.S. has not built a shipyard in decades.

If our goal is to strengthen the U.S. shipbuilding industry, imposing tariffs at the docks will not help us achieve that goal. Modernizing shipyards, supporting training programs, and funding R&D will make a difference.

In this regard, cooperating with allies would also be beneficial. Japan and South Korea lead the global commercial shipbuilding industry. Collaborating with them to diversify supply chains makes more sense than punishing every U.S. exporter when their cargo leaves the port.

Shipbuilding is part of a larger competitiveness issue, and export taxes cannot resolve it.

China's dominance in shipbuilding is structural, accumulated over decades of government investment. Tariffs cannot change this.

Instead, it will only increase the cost of transporting U.S. goods, weaken LNG exports, put U.S. auto and equipment manufacturers at a disadvantage, and invite retaliation from trade partners who see through its excuse.

Instead of developing a maritime strategy, the Trump administration is seeking a blunt tool that does not build a single ship. It only undermines the most competitive U.S. exporters.

Section 301 was never intended to be used as an industrial policy tool. Changing its use in this way is not a strategy, but a costly disruption. The right path is investment, not tariffs. If the U.S. wants a stronger shipbuilding industry, it must build one.

Congress and the business community should expose this policy for what it is: a tariff that clearly fails its goals and harms the U.S.

Source: The National Interest

Author: Dr. Mark L. Bush

Date: September 8

Original: https://www.toutiao.com/article/7548360613853020698/

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