Three sources familiar with the findings of a month-long trade investigation have confirmed that the U.S. administration under President Joe Biden has concluded that China is using unfair policies and practices in order to dominate the global shipping, logistics, and shipbuilding industries.

U.S. Trade Representative Katherine Tai (USTR), at the request of United Steelworkers, and four other U.S. Unions in April 2024, launched the investigation under Section 301 of 1974's Trade Act. This section allows the U.S. government to penalize countries who engage in "unjustifiable", "unreasonable", or burden U.S. Commerce.

One of the sources who wasn't authorized to speak in public said that investigators concluded that China targeted shipbuilding and the maritime industry to dominate, using financial assistance, barriers for foreign companies, forced technology transfers and intellectual property theft, and procurement policies to give their shipbuilding industry and maritime an advantage.

Beijing "severely lowered and artificially suppressed China’s labor costs" in the maritime, shipbuilding, and logistics sectors, this person said, citing an excerpt from the report.

USTR, White House and the Trump transition team did not immediately respond to a request for comment. Chinese officials did not respond to requests for immediate comment.

Data cited in the investigation shows that China's share in the $150 billion global industry of shipbuilding has increased to more than 50% in 2023, from around 5% back in 2000. This was largely due to government subsidies. Meanwhile, once dominant U.S. Shipbuilders saw their share drop below 1%. South Korea and Japan rank as the second largest shipbuilders.

The unions' proposal to introduce tariffs on Chinese-built ships or charge port fees could be a step in the right direction. They said that such a move is likely to come after a period of public comments.

Trump used Section 301 to impose tariffs against hundreds of billions dollars worth of Chinese imports in his first term, after a USTR probe found that China had misappropriated U.S. intellectual property and was coercing Chinese firms to transfer U.S. technologies.

Sources said that USTR would release its findings in the coming days, just a few days before Biden leaves office as a Democrat on January 20.

The report follows harsh criticism by the U.S., other Western powers and China of its aggressive industrial policies. It also reflects rare bipartisan consensus on the need to fix U.S. Shipbuilding. China denies all wrongdoing.

The report comes after four years of Biden administration efforts to reduce China's dominant position by continuing Trump-era duties, adding new ones including those on electric vehicles and imposing export controls.

Tai's Office announced last month a last minute trade investigation on older "legacy" Chinese semiconductors. This could lead to more U.S. Tariffs being imposed on Chinese chips that power everyday products from automobiles to washing machine to telecoms gear.

Experts are in agreement that rebuilding America's once-vibrant shipbuilding and maritime industries will take decades, and cost tens or hundreds of millions of dollars. They said that tariffs will not be enough.

According to an excerpt of the report, "China's targeting the maritime, logistic and shipbuilding sectors to dominate is the greatest obstacle to the revitalization for U.S. industry in these sectors," concludes the report.

Scott Paul, the president of American Alliance for Manufacturing (a nonprofit partnership between labor and business), said that he was convinced by the findings.

He said: "My understanding is... that a process will try to stop the erosion and start growing of our shipbuilding industry base,"

Trump, who said that he would increase tariffs against Chinese goods by 60%, blasted the country's moves to dominate both commercial and military shipbuilding. He told Hugh Hewitt, a radio host, that America had "suffered greatly" and needed a change of course.

He suggested that the U.S. may have to rely on allies to help build the necessary naval vessels for its military.

Mike Waltz, Trump's new national security advisor, has been actively involved in the issue. He drafted a bipartisan legislation with Democratic Senator Mark Kelly before he left Congress to revive the U.S. Shipbuilding Industry.

We are way too dependent, in particular on China. We don't have surge capacity. "We have a very small shipbuilding capability, which is completely unacceptable for a superpower," Paul said.

In the 1980s, there were over 300 American shipyards. Now there are only 20. Experts report that demand for both civilian and military ships is growing. Reporting by Andrea Shalal, Editing by Heather Timmons & Raju Gopalakrishnan

(source: Reuters)