The Trump Administration’s tariff blitz and the proposed “Shipbuilding for Prosperity and Harbor Infrastructure for Prosperity and Security Act” better known as SHIPS, could collectively detour the Ro/Ro business in the US … or not.

Hold Your Roll…call.

On April 17th the Office of the United States Trade Representative (USTR) issued a final notice on its Section 301 investigation on “China’s Targeting the Maritime, Logistics and Shipbuilding for Dominance.” The notice finalized the USTR’s original February announcement with a few revisions.

The USTR Section 301 final notice came on the heels of President Trump’s April 9th Executive Order on “Restoring America’s Maritime Dominance” which established a “Maritime Action Plan” (MAP) endorsing the USTR’s restrictions on Chinese built and/or flagged vessels as well as other actions that would affect foreign built and/or flagged vessels calling US ports. MAP also instructed the Department of Homeland Security (DHS) to “take all necessary steps including proposing new legislation” to ensure many of the features were incorporated into legislation. In turn, the SHIPS Act was reintroduced with bipartisan support — ironically the legislative concept for SHIPS was initially introduced by the Biden Administration — in the House and Senate and the bill is expected to be reconciled between the two legislative bodies and eventually passed with yet unclear modifications.

Pushback to Proposal and Ro/Ro Weighs In

The main target of all these efforts was Chinese built and/or flagged containerships in the US trade lanes. However, the regulatory efforts also included most commercial ship types and equipment such as gantry cranes, containers and even truck chassis.

As might be expected, the legislation received considerable maritime industry pushbacks that pointed out that while the goal of rebuilding US commercial shipbuilding capabilities is laudable, to do so as outlined in the initial USTR notices would make ship calls economically unviable and cripple and in turn financially devastate US ports — not to mention reduce ship calls inevitably raising costs to importers and exporters alike as regulatory costs are forwarded to the consumer. [www.ajot.com, March 27, 2025 “USTR proposal ironically represents grave threat to U.S. port system”]

In March, John H. McCown, a noted US maritime analyst, wrote in a detailed comment — essentially a rebuttal — to the USTR of the proposed action, “It is my view that whomever crafted the proposed actions either does not know as much as they should about how maritime supply chains operate or worse yet does not care about how or if they operate.”

But perhaps the most outspoken of the industry commentators was Andrew Abbott, chief executive of ACL (Atlantic Container Line), a Ro/Ro operator specializing in vehicles and high and heavy freight. Abbott, an industry veteran whose career has included stints with a wide variety of ocean carriers both foreign and US, said of the proposed legislation, “This was an idea that emanated from the Biden administration. It sounds like Motherhood and Apple Pie: build up American shipbuilding and go after China at the same time. Look at the large number of Democrats in Congress that are supporting it. It was cobbled together by people who did not understand how international trade and transportation work. I am a bit surprised that the USTR has given this … proposal the time of day, given the negative impact on American industry.”

From Abbott’s perspective, the fees imposed for calls made by Chinese built ships — which like container ships, represents a majority of the builds constituting the Ro/Ro fleet — to US ports economically unfeasible.

Abbott made it clear that ACL would simply stop calling in the US if there weren’t changes made to the proposed legislation. He said ACL would concentrate on European and Asian trade lanes rather than pay the proposed fees associated with a Ro/Ro ship built in China calling at US ports.

What’s In the Annex

Since March modifications have been drafted to the bill (versions in the House and Senate) that would ease the burden on ocean carriers — largely containerships — calling US ports with Chinese built vessels. However, Ro/Ro vessels were singled out for exceptions that could leave Ro/Ro operators currently calling US ports in a precarious position.

According to various reports, Annex III contains the relevant information on potential legislation impacting Ro/Ro carriers. Effective October 14, 2025, a fee in the amount of $150 per Car Equivalent Unit (CEU) capacity of the entering non-US-built vessel, effective as of October 14, 2025. This fit in with the broader industrial policy initiative to create a robust American shipbuilding sector. The USTR and legislators envision this fee will incentivize US-built car carrier vessels.

A Ro/Ro operator could receive a fee remission for up to three years if it orders and takes delivery of a US-built vessel of equivalent or greater capacity. A vessel operator will be eligible for a fee remission for three years if it orders and takes delivery of a US-built vessel of at least equivalent size.

The obvious problem with the proposed legislation is the US has very little shipbuilding capacity and the building costs are two-to-three times that of other shipbuilding nations such as China, South Korea and Japan. Additionally, the ship construction times are considerably longer and the access to the basic construction materials and parts available from US sourcing is limited.

Wallenius Whilhelmsen (WW) in their Q-1 2025 analysis wrote that the USTR port dues for car carriers of $150/CEU when applied to 300-350 US voyages could exceed $300 million and commented, “we [Wallenius Wilhelmsen] expect this fee to be passed on to the customers similar to EU ETS [European Union Emissions Trading System].”

Demand: Tariffs or No Tariffs

As this article was being written [June 12, 2025] President Trump was quoted in press reports of warning that auto tariffs could be levied soon saying, “I might go up with tariffs in the not-too-distant future.”

If the warning does indeed become fact, the move could have a negative impact on revenues for Ro/Ro operators. In WW’s Q1 presentation they cited data from S&P on the potential impact of tariffs on Ro/Ro. The chart with and without tariffs laid out the potential hit the Ro/Ro import business in the US might expect — 2025, no tariffs 3.7 million units, with tariffs 3.4 million units, -7%; 2026, no tariffs 3.8 million units, with tariffs 3.2 million units, -15%; 2027, no tariffs 3.8 million units, with tariffs 3.3 million units, -13%.

Nonetheless, S&P expects growth in global deep-sea volumes even with the US market taking a hit. For Ro/Ro operators this presents a dilemma of vessel deployment as demand shifts and costs rise on the US leg. Ro/Ro operators already are contending with balancing rotations with higher volumes coming out of Asia and lower volumes from the US and Europe, tariffs add another layer of complication to desirable routings.

Another aspect of the Ro/Ro deployment dilemma lies with the “other” freight carried by Ro/Ro operators. With Trump Administration’s abhorrence of wind projects and virtually all renewables, the shipments of High & Heavy (HH) freight, like those associated with wind turbine projects will decline. And the imports and exports of H&H loads, can in the case of some Ro/Ro operators account for half the revenue.

Ro/Ro Newbuilds

And if the US does undertake to jump into Ro/Ro, it might want to look at what is happening in China with another Ro/Ro startup.

BYD is China’s mega EV and Plug-in Hybrid electric vehicle manufacturer and has now stepped into the Ro/Ro business to ship its production to consumers — and done so in a big way. Recently the company launched the BYD Xi’an and BYD Shenzhen, reportedly bringing the car manufactures’ fleet to six.

Back in 2022, with little fanfare, BYD said it was going to invest just under $700 million to build a Ro/Ro fleet with each vessel capable of handling 7,000 vehicles. The latest launched Ro/Ros, the BYD Shenzhen and Changsha, upped the ante having a capacity of 9,200 vehicles — which might anoint them the Ro/Ros with the largest carrying capacity.

Can US shipbuilding compete with China in building Ro/Ros? It is probably fair to say not now and likely not within even a decade.

Abbott, had an interesting counterproposal to the USTR that would apply to the Ro/Ro conundrum. He recommends: 1. “Don’t punish carriers and Americans exporters who have followed every rule and regulation for commercial decisions made in the past.” 2. “Put the effective date of any new charges on new ship orders placed at a future point so we get a “soft landing” that doesn’t hurt American people and companies.” 3. “Big fat subsidies alone (that cost big tax dollars) will not bring back commercial shipbuilding to the US. We need to figure out its viability (steel supply and proximity, labor availability, technology) and [then] decide what we need to make it a stand-alone industry. Don’t subsidize our way to competitiveness. Eliminate the government-imposed burdens on companies to allow them to compete independently with the rest of the world.”

Point “3” particularly as it applies to Ro/Ro ships is important. The US can and does build a limited number of Ro/Ro vessels. For example, Matson had two Jones Act Kanaloa Class Con-Ro [Container-Ro Ro] vessels built at General Dynamic NASSCO shipyard in San Diego for around $500 million — the largest of their type built in the US. Nonetheless, it will take decades to build a “standalone” shipbuilding industry that can compete globally.

But in the meantime, the US can compete at the Port level for Ro/Ro services. Ports like, Baltimore, Brunswick, San Diego, Hueneme, Quonset/Davisville, Antioch, Benicia, Jacksonville, Portland, Houston, Los Angeles, Long Beach, Houston, Galveston, Miami, Richmond, Philadelphia, New York/New Jersey just to mention a few ports that have invested billions and are continuing to invest in their Ro/Ro facilities.

Can the US afford to ignore this hard-earned competitive advantage?