Papavizas says Trump ‘executive order’ supports US Ships Act & shipbuilding

The United States is planning to charge fees on any ship that is part of a fleet that includes Chinese-built or Chinese-flagged vessels arriving at US ports as part of an executive order that the Trump Administration is drafting to rebuild US shipbuilding, according to news reports.

The Trump Administration draft executive order would support elements of the proposed Bi-Partisan Ships for America Act or SHIPS ACT’ which authorizes the US to build and acquire at least 250 new US flag ships over the next ten years. It is the “starting point that is needed to be supported,” according to Charles Papavizas, a maritime attorney and partner in the firm of Winston and Strawn based in Washington, D.C.

Papavizas told AJOT: “First, its (the Trump Administration draft executive order) about the US merchant marine, not just shipbuilding, by all appearances. Second, some things can be done to promote the US merchant marine, including U.S. shipbuilding, by executive order but mostly the Administration needs legislation like the SHIPS Act to accomplish that. So, it appears to be a positive development for the enactment of that legislation.”

Papavizas spoke to the Propeller Club of Northern California (PCNC) on February 27th in which he said the proposed legislation will be introduced within the next couple of months. The SHIPS ACT could lead to a major new shipbuilding mobilization in the United States, if Congress moves expeditiously to enact the measure and ensures sufficient funding.

The Trump Administration’s executive order stems from a US Trade Representative investigation into Chinese shipbuilding practices which found: “China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance burdens or restricts U.S. commerce …”

American Maritime Partnership Support

On March 4th, the American Maritime Partnership (AMP) and its President, Jennifer Carpenter, commended: “President Donald Trump’s Executive Order on Shipbuilding announced at his Address to Congress: We commend President Trump’s commitment to strengthening American maritime leadership with today’s executive order, which reinforces the importance of a robust shipbuilding sector and U.S.-flagged fleet to our national, economic and homeland security. The America first Jones Act remains a cornerstone of U.S. maritime policy, fostering innovation, 650,000 American jobs and a strong domestic fleet ...”

Retired US Coast Guard Admiral Joel Whitehead, Executive Vice President, International Propeller Club, introduced Papavizas at the Propeller Club of Northern California briefing and said the SHIPS ACT will have the Propeller Club’s support: “The International Propeller Club is anxiously following this legislation. In our view, this reform is very much needed. The legislation was proposed by Senator Mark Kelly Democrat of Arizona, a graduate of the United States Maritime Academy and Republican Senator Todd Young of Indiana. In the House it was introduced by John Garamendi (D-California) and Congressman Trent Kelly (R-Mississippi) It has support on both sides of the political aisle. The proposed legislation offers a comprehensive approach to revitalizing the United States as a maritime nation by establishing national oversight and consistent federal funding for the US maritime industry, making US flag vessels commercially competitive and international trade, rebuilding the U.S. shipyard industrial base, and expanding and strengthening the recruitment, training and retention of mariners and shipyard workers.”

Papavizas explained that the SHIPS ACT has support within the Trump Administration because former Congressman Mike Waltz, one of the SHIPS ACT’s original co-sponsors is now President Trump’s National Security Advisor: “That was a good thing for the bill, obviously, but no action has been taken, and the bill needs to be reintroduced this year … There is going to be an effort to generate as many co-sponsors as possible.”

Michael Waltz is a former Army Special Forces officer who is the 29th and current United States national security advisor under President Donald Trump. He previously served as the U.S. representative for Florida's 6th congressional district from 2019 to 2025.

PROVISIONS

Papavizas said the SHIPS ACT aims to establish “a new infrastructure for dealing with maritime policy.” The effect would be to:

• Establish a maritime ‘Czar’ in the White House — the “Maritime Security Advisor”
• Create a Maritime Security Board consisting of government reps to set policy
• Require an implementing plan
• Create a Maritime Security Trust Fund
• Intended to segregate funding for certain existing programs and new programs
• Source of funds – regular tonnage taxes, special tonnage taxes/light money (suspended where no discrimination but not for a “foreign country of concern” like China)

The goal is to establish a Strategic Commercial Fleet as follows:

• Managed by MARAD (US Maritime Administration) with Advisor/Board direction
• Target of 250 vessels
• “Annual competitive selection process”
• “Best value” — stipend rate to be competed unlike existing maritime programs
• Priority for vessels with “capabilities critical to the national and economic security of the United States”
• Foreign-built reflagged vessels permitted in early years – by FY ’33, all US-built
• Starts with at least 10 vessels per year beginning two years after enactment
• Seven-year duration contracts — renewable twice to maximum 21 years
• Limited no fault termination protection for having built a vessel in the US.

Shipbuilding Program

The Shipbuilding program will contain the following:

• Financial assistance awards” — owners or shipyards for both vessel construction and shipyard construction/modernization
• Basis of amount — like CDS — difference between US and foreign cost: The construction differential subsidy (CDS) program was a US government program that helped offset the high cost of shipbuilding in the United States. The program has been unfunded since 1982.
• $250 million authorized for each of FY ’25 – FY’34
• Owner investment tax credit
• 33% + 5% U.S. based P&I + 2% if American Bureau of Shipping ABS-classed
• Shipyard investment tax credit provides a 25% for shipyard investments
• Expanded small shipyard grant program and Title XI loan guarantees (revolving fund; any coastwise vessel)
• Liberalized use of construction reserve funds/capital construction funds
• Streamlined environmental permitting
• Vessel repair duty increased to 200% for repairs in shipyards of concern excluding VISA (Voluntary Intermodal Sealift Agreement) enrolled vessels.

Workforce Provisions

In terms of workforce, the SHIPS ACT will provide the following:

• Public service loan forgiveness for qualifying merchant mariners
• GI educational assistance for merchant mariners serving at least 10 years
• Reimbursement of relicensing costs for Strategic Sealift Officers or Coast Guard Reserve
• Noncompetitive eligibility for federal employment
• Merchant mariner retention/reserve program
• Enhanced federal recruiting and training programs
• Renewed attention to both Kings Point and state academies
• Streamlined merchant mariner credentialing

Papavizas explained: “There's a fair amount of attention in the bill about the workforce. I would say that these measures are probably the least controversial and maybe the most likely to be taken out of the bill if the bill does not advance on its own and put either into the annual Coast Guard, Coast Guard Authorization bill, or the National Defense Authorization bill. There are consensus ideas about how to attract people to the industry, how to make it more cost effective, how to recruit, how to get the academies back at a level they need to be in terms of infrastructure and the like.

Needed Collaboration with Japan and South Korea

Collaboration with countries such as Japan and South Korea will be key: “I'm sure you know that most of the existing large shipyards are property constrained and can't easily expand. So that means new shipyards. And who's going to build the new shipyard? Well, the South Korean shipyards could. But the demand signal is going to have to be pretty strong.”

Papavizas specializes in coastwise laws such as the Jones Act (“Jones Act”). He has extensive experience in advocacy on behalf of maritime clients before the U.S. Coast Guard, the U.S. Maritime Administration, and the U.S. Congress. Clients have included U.S. and foreign vessel owners and operators, industrial companies, private equity firms, commercial banks, and other financial institutions, shipyards, ship managers, and marine equipment suppliers. He has been actively engaged in the U.S. offshore wind sector since 2009.