Despite President Donald Trump’s plans to revitalize the U.S. shipbuilding industry and close its gap with China, the path to getting there may need a bit more direction from the branch overseeing the process, the federal government’s congressional watchdog insists.
According to a report from the U.S. Government Accountability Office (GAO), the Department of Transportation’s Maritime Administration hasn’t established the goals required to properly assess the performance of four financial aid programs designed to encourage shipbuilding.
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The financial assistance programs exist due to the excess costs to build commercial and military ships in the U.S. compared to foreign nations like China, South Korea and Japan.
The Federal Ship Financing Program generally offers loan guarantees for vessel construction at U.S. shipyards. In the last five years, the program executed two loan guarantees for two vessel owners totaling nearly $400 million.
Two tax deferral programs, the Construction Reserve Fund Program and the Capital Construction Fund Program, allow vessel owners or operators to defer paying tax on certain eligible deposits that are placed into an account and can be used to fund projects at U.S. shipyards.
The Small Shipyard Grant program provides grants to small shipyards for equipment or training. In fiscal year 2024, this program had $8.75 million in available funds and had 78 grant applications from shipbuilding or repair companies requesting just under $50 million.
Upon interviewing 31 industry stakeholders, GAO identified three additional challenges that heavily impede shipbuilding growth. First, the report found that domestic vessel owners often face competition from other modes of transportation like trucking. Shipyards are involved in the other two challenges, in that they often have aging infrastructure and deal with fluctuating demand for new vessel construction, which creates “boom-and-bust” workforce cycles.
In kind, the report listed three ideas to address the challenges, with the first to encourage the use of domestic vessels to carry cargo along rivers or between coastal ports.
To handle the shifting demand, GAO says shipyards should smooth the workflow through large, consistent federal vessel procurements. And to help upgrade the outdated infrastructure, the watchdog suggests to expand the Small Shipyard Grant program and encourage foreign investment.
The shipbuilding renaissance stems from national security concerns on both sides of the aisle, with the U.S. Trade Representative (USTR) concluding earlier this year that China has an “unreasonable” dominance of global maritime, logistics and shipbuilding capabilities.
As of 2022, while the U.S. built five commercial ships, China built a whopping 1,794, according to data cited by the USTR from BRS Shipbrokers. In 1975, the U.S. led the world with 70 ships constructed.
Trump shipbuilding office has hiccups amid agency cuts
The GAO report was released two days before The Wall Street Journal published a report which indicated that the shipbuilding plans have seen numerous setbacks, which have come because of competing agendas within the Trump administration.
While the shipbuilding office is supposed to oversee the president’s executive order to bolster the wider maritime industry, it has already shrunk because of broader cuts across the National Security Council (NSC).
Five of seven workers working in the shipbuilding office left in recent weeks, either because their time assigned to the office ran out or because they moved to another government department. In total, more than 100 staffers across the NSC—roughly half the agency—were dismissed from their roles or sent to other posts as part of reorganization.
There are also conflicting narratives on the direction of spending in the coming year.
During a June 10 hearing, Sen. Roger Wicker (R-Miss.), chairman of the Senate Armed Services Committee, said he was disappointed with the administration’s budget request for the Navy for the 2026 fiscal year, which cut the spending to $21 billion from $37 billion in the prior year.
In a post on X, Russ Vought, director of the White House Office of Management and Budget, rebutted that the total shipbuilding request for the coming year is $47.4 billion, about 21 percent above the prior year’s budget.
According to Vought, those figures include discretionary and mandatory spending included in the One Big, Beautiful Bill Act, which was signed into law by President Trump on Friday. Two destroyers are included in the sweeping tax-and-spending bill.
In another potential conflict of interest for shipbuilding efforts, the administration’s closure of the U.S. Agency for International Development (USAID) shut down the Food for Peace program, which provided cargo for U.S.-flagged ships. The WSJ report noted that some industry officials say the winddown of Food for Peace could mean phasing out some ships and laying off seafarers.
And while the shipbuilding office still has two employees, the Trump administration has not named an assistant secretary of the Navy for research, development and acquisition, which is a role that coordinates Navy shipbuilding.
The White House nominated former Maersk executive Stephen Carmel to lead the Maritime Administration, which oversees U.S. maritime programs including the Merchant Marine.
