Considering the impact of the creation of a US-flagged, built and crewed merchant fleet
 US President Donald Trump has a dream of creating a merchant marine worthy of the Unites States of America. While he imagines it from laying down keels to the domination of trade lanes, the dream might well turn out to be the nightmare many expect.
One respects Mr Trump enough to know the risks involved. Ocean carriers are mostly foreign flagged mainly because they employ affordable labour, and that American workers are among the world's least affordable.
But squaring that circle is at the heart of
his MAGA movement, that is, having tariffs protect the exclusive riches of America's consumer market from foreign competition while still making it worthwhile for niche offshore shippers to participate.
It's a delicate balance. But as demonstrated by the loss of the de minimus exception in e-commerce, under which the "fast fashion" items entered the US duty-free, the resulting loss shippers suffered was not enough to remove the wiggle room that sustained the trade as the retail price increase remained within the range of consumer affordability.
To compensate for losses that come sooner rather than later, the Trump administration anticipates that economic growth will cover it, generated by the mere absence of the wasteful socialist Democratic administration, as well the massive cost-savings from the purges of the obese bureaucracy, in which one activity in four is said to be wasteful, fraudulent or both.
In terms of trade, what Trump is doing is not much different from what Abraham Lincoln championed as a Congressman in the 1840s
Lincoln believed that protective tariffs were essential for promoting domestic industries and economic growth. At the same time, tariffs were the primary source of revenue for the federal government.
Lincoln's support for protective tariffs aligned him with the Whig Party and later the Republicans, both of which championed economic policies that favoured industrial growth and infrastructure development.
Lincoln's stance on tariffs was part of a broader economic vision that included support for internal improvements and a national banking system.
Presumably, America's new merchant marine would run like Hawaii's Matson line, that carries goods from Hawaii, Alaska and west coast ports on the Lower 48. Only at the height of the Covid scare, when slots were scarce, was it able profit from transpacific China routes - and then only as long as crisis lasted causing rates to soar.
Commercial considerations aside, the overriding concern is national security. As Europe's worries about Russia and its supposed ambitions to restore the territory of the defunct Soviet Union, America is more fearful of China and its rearmament ashore and afloat as well as its quasi-colonialist Belt and Road Initiative, which appears benign but can be viewed from a more baleful perspective.
Denigrated by the leftist anointed credentialed class, but beloved by the hoi polio, who put Trump into office, in the turn of the 20th century time known as the Belle Epoch with its fond memories of Teddy Roosevelt and Rudyard Kipling.
Those were the days of the "Great White Fleet", of 16 US battleships that embarked on a global journey from 1907 to 1909. The ships were painted white, which was the Navy's peacetime color. This was a time when America was riding high, emerging as one of the great powers in the world.
More recently, the idea of creating a substantial US-flagged, built and crewed merchant fleet has had mixed reactions in the industry itself.
Joe Kramek, CEO of the Washington-based World Shipping Council (WSC) acknowledges the potential benefits of revitalising the US shipbuilding industry, but emphasises the need for policymakers to reconsider damaging proposals and seek alternative solutions that support American industries.
Jeremy Nixon, CEO of the Japanese-owned but Singapore-based Ocean Network Express (ONE) warned that Trump's plan could be very damaging for ocean carriers and their customers.
No friendlier was Soren Toft, CEO of the world's biggest liner, the Swiss-Italian Geneva-based Mediterranean Shipping Co (MSC). He expressed concerned about the impact of the plan had on smaller ports and the potential for a repeat of early pandemic backups that hobbled global trade flows.
Mr Nixon and Mr Toft indeed reflect the interests of major container shipping lines, which are foreign-flagged. These lines often prioritise global competitiveness and cost-efficiency, which can sometimes conflict with policies aimed at strengthening domestic shipping industries.
On the other hand, the World Shipping Council (WSC) represents a broader range of interests within the international liner shipping industry. While it advocates for policies that support global competitiveness, it also has to consider the diverse viewpoints of their member companies, which can lead to a more nuanced approach.
It's not uncommon for industry groups and stakeholders to have differing perspectives based on their specific interests and operational priorities. This dynamic often shapes the debate around policies affecting the shipping industry.
Marine policy attorneys have analyzed the potential impact of Trump's agenda, including the Ships Act, which aims to revitalize the US-flag international fleet and counter China's influence in shipbuilding. They argue that this could strengthen national security and boost the domestic shipping industry.
Global economic growth would have to be substantial if not overwhelming to have a palpable political impact, and the purges of the civil service bureaucracy would have to be thorough going to provide the cost savings to cover the spending needed to create and maintain a merchant fleet.
Independent of American moves, is the fate of world shipping. While the US is a great magnet of consumer goods, so too is western Europe. The hopeful and fair-minded think all nations will move towards a position of reciprocity in trade. Others see the rules-based world, largely dependent of US generosity, born of the Marshall Plan of postwar reconstruction, as being replaced by a 19th century one's country first and always policy.
Moderation in everything - even in moderation, said a wise man long ago. As it turns out, everything includes "empathy", of which America thinks there is too much of - far too much. It's had America pay the bills of international bodies of which it is a member, yet have its fellow members work against its interests.
Well, Uncle Sam is saying goodbye to all that and a merchant fleet is just one of many ways of saying so. |
