Editor's note: This article was written by Warwick Powell, an adjunct professor at the Queensland University of Technology and advisor to former Australian Prime Minister Kevin Rudd. It reflects the author's opinions and not necessarily the views of CGTN.

The US Customs and Border Protection will implement new "Section 301" fees on October 14, targeting Chinese-owned or operated vessels at a rate of $50 per net tonne. These measures, introduced on the back of the US Trade Representative's recent findings under Section 301 which accused China of "unreasonable" practices aimed at dominating the maritime, logistics, and shipbuilding sectors, are seen as a bold defence of American industry. In truth, they reveal the opposite: A failure of understanding about how America lost its shipbuilding capacity in the first place. The problem is not China's ambition. Rather, it's the United States' decades-long abdication of industrial policy, its hollowing out of skills and technologies, and its financialized notion of competitiveness.

For almost 70 years, the US has not been a global leader in commercial and naval shipbuilding. The US holds a tiny global market share for shipbuilding, around 0.1 percent as of 2024, with China dominating at over 53 percent of the commercial market.

The decline began well before China's rise. As American yards shifted toward military contracts and domestic protectionism, the Jones Act (enacted in 1920) protected the shrinking merchant fleet from the impact of global competition. Behind the protective wall of the Jones Act, US shipbuilders were guaranteed government custom but had few incentives for innovation and productivity. Over time, US shipyards became less competitive on a global scale. 

While Japan, South Korea, and later China pursued state-coordinated industrial strategies that have built integrated supply chains, nurtured ship design capabilities, and invested in digitalized shipyard infrastructure, Washington allowed its industrial base to wither. Finance has displaced manufacturing as the axis of national competitiveness, and the patient accumulation of technical know-how has given way to the impatient and often blind pursuit for quarterly returns.

Even the much vaunted US navy is no longer what it once was, as production and innovation lag behind and many ships stuck in dry dock waiting for spare parts and repairs.

The result is an industrial hollowing that tariffs and assorted financial imposts on competitors cannot reverse. Washington, as a result of the cumulative effects of decades of failed policy, has "lost control of the seas."

The Section 301 measures, by design, are punitive rather than productive. They raise costs, generate political noise, and create the illusion of action. But they do nothing to rebuild the dense ecosystem of skills, supply chains and capital equipment that once made American shipbuilding world-class. In the end, the added costs will simply cascade down the value chain: Importers will absorb them first, and consumers, both enterprises and households, will pay them later. It's a familiar pattern of self-inflicted inflation under the guise of industrial defence.

This is not industrial policy; it's political theatre. The US administration has tried to frame it as part of a wider "de-risking" strategy from China. Yet "de-risking" has become shorthand for a reactive and defensive posture that substitutes financial instruments and trade penalties for genuine productive renewal. If Washington were serious about re-industrialization, it would be investing in shipyard modernization, maritime workforce development, green propulsion technologies, and the rebuilding of domestic steel and precision component supply chains. Instead, it relies on sanctions, tariffs, and punitive investigations - the tools of a financialized state that still imagines that controlling prices and flows can substitute for rebuilding productive capacity.

The irony is that China's strategy in this field is neither mysterious nor illegitimate. China's shipbuilding capacity is now 232 times greater than that of the US. It has done what leading industrial nations have always done: Use state policy to build capabilities in sectors of strategic importance. China's integration of shipbuilding with its logistics, energy, and digital infrastructure has become part of a coherent maritime industrial policy that connects production, technology and trade in a way the United States has long since forgotten how to achieve. What Washington interprets as unfair "targeting" is, in essence, the exercise of strategic economic planning.

The real lesson of China's rise should not be that America must punish it, but that America must learn from it. The most successful economies, from post-war Japan to Germany and now China, have treated industrial capacity as a public good, not a residual by-product of capital markets. They recognize that complex industries require coordination, patient capital and an enduring commitment to technical excellence. The US, by contrast, has relied on the mirage of financial strength to conceal the erosion of its industrial foundations. Section 301 represents the continuation of that illusion: A policy response born of the very financialized mindset that has caused the problem.

If Washington continues to follow this path, it will end up not with a revitalized shipbuilding sector, but with higher import costs, further inflationary pressures and a deepening strategic dependence on others. The lesson of history is clear: No amount of punitive measures can substitute for the rebuilding of skills, supply chains and productive ecosystems. Re-industrialization begins with industrial understanding - something that has been in short supply in Washington for a very long time.

Until the US policymakers realize this, Section 301 will remain just an attempt to impede competition rather than learning how to skate better.