The Trump administration’s initiative to boost American shipbuilding by imposing penalties on Chinese vessels arriving at U.S. ports could inadvertently harm the competitiveness of U.S. oil and gas, disrupting the global energy market. In February, President Donald Trump proposed an executive order that would impose fees of up to $1.5 million on Chinese-built ships and $1 million on fleets that utilize such vessels. This plan is supported by organizations like The United Steelworkers union and The Alliance for American Manufacturing (AAM), which believe it could restore economic security and counter China’s trade practices.
However, the fossil fuel industry has reacted negatively to this proposal. The American Petroleum Institute, representing producers and refiners, warned that such penalties would undermine Trump’s “energy dominance” agenda by increasing shipping costs for U.S. fuels, thereby making the country less competitive globally. With approximately one-fifth of the global tanker fleet being Chinese-built, this penalty could significantly restrict the availability of vessels for U.S. exporters and importers.
As of now, Chinese shipyards are slated to construct over 60% of the upcoming tanker fleet, a number that’s expected to grow. In contrast, U.S. shipbuilders have not received orders since 2022, which raises questions about the feasibility of reviving the domestic ship-building sector to compete with Asian manufacturers. Should these penalties be enacted, the oil market may face adjustments that could harm U.S. exporters.
Increased freight rates for non-Chinese vessels may lead to lower prices for crude and refined products, negatively impacting profit margins and possibly leading to decreased domestic production. This would counter the administration’s objectives. Additionally, the proposed measures could lead to a fragmented tanker market, separating Chinese and non-Chinese fleets and creating inefficiencies.
The intention behind this executive order remains unclear, as it could either be an attempt to realign trade with China or a tactical bargaining chip to extract concessions from Beijing. Regardless of its outcome, the mere threat of these penalties is already influencing shipping practices and complicating the energy market landscape.