Bipartisan Bill Reintroduced to Enhance U.S. Shipbuilding, Maritime Sector, National Security

The Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act (the Act), comprehensive legislation aimed at revitalizing the U.S. shipbuilding and commercial maritime industries, was reintroduced by Sens. Mark Kelly (D-Ariz.) and Todd Young (R-Ind.), along with Reps. John Garamendi (D-Calif.) and Trent Kelly (R-Miss.). The Act, first introduced in December 2024 with overwhelming support from industry leaders and other stakeholders, seeks to address the urgent need to strengthen America’s shipbuilding capacity and commercial maritime industry. (See Holland & Knight’s previous blog, “Three Expectations for the U.S. Coast Guard in 2025 Under a Second Trump Administration,” Jan. 18, 2025). The bill will now be presented in two pieces to the U.S. Senate: the SHIPS for America Act and the Building SHIPS in America Act.

The legislation aligns some goals with Executive Order (EO) 14269, issued on April 9, 2025, by President Donald Trump, “Restoring America’s Maritime Dominance,” which seeks to address national security concerns with a collaborative interagency approach to increase U.S. competitiveness in the shipbuilding and maritime sectors. (See Holland & Knight’s previous alert, “New Executive Order Signals Trump Administration Investment in U.S. Maritime Sector,” April 11, 2025.)

The SHIPS for America Act seeks to close the gap between the number of U.S.-flagged vessels in international commerce and those of other countries, particularly China, which boasts approximately 5,500 vessels in international commerce, compared to only 80 U.S.-flagged vessels. The Act proposes national oversight and consistent funding for U.S. maritime policy by boosting the U.S. Merchant Marine, making U.S.-flagged vessels commercially competitive in international commerce by 1) reducing regulatory and administrative burdens, 2) rebuilding the U.S. shipyard industrial base, and 3) expanding and strengthening mariner and shipyard worker recruitment, training and retention.

The legislation also establishes a new Office of the Maritime Security Advisor within the White House, which would advise the president from a whole-of-government approach to maritime issues and convene a Maritime Security Board comprising various defense and civil agencies to carry out a national maritime strategy.

Because of the breadth of the legislation, the SHIPS for America Act may be referred to various committees of the Senate and House of Representatives. Though each committee will have to favorably report the legislation before the bill is voted on by the full House and Senate, parts of the SHIPS for America Act could move in an annual legislative vehicle such as the National Defense Authorization Act (NDAA).

Shipbuilding and Innovation

The Act proposes a Shipbuilding Financial Incentives Program to reinvigorate the domestic shipbuilding industry. This program would provide financial incentives to U.S.-flagged operators for constructing, repowering or reconstructing eligible oceangoing vessels in U.S. domestic shipyards. These incentives would, in turn, provide crucial support to the U.S. shipbuilding sector and incentivize vital growth so that U.S. shipyards can compete in the global market. (See Holland & Knight’s previous blog, “Growth Likely on the Horizon for America’s Shipyards in 2nd Trump Administration,” Jan. 2, 2025).

The Act would also establish the National Shipbuilding Research Program to advance and accelerate research and development for next-generation technologies in shipbuilding. This initiative would foster much-needed innovation and technological advancements in the U.S. maritime industry.

Workforce Development

To develop a robust maritime workforce, the Act establishes Centers of Excellence for Domestic Maritime Workforce Training and Education. These centers would train and educate workers launching careers in the maritime industry and play a vital role in preparing the next generation of maritime professionals. The Act also creates and tasks the Maritime Career and Technical Education Advisory Committee with identifying new training opportunities for maritime workers to equip the workforce with the skills most needed by the maritime industry.

The Act further incentivizes careers in the maritime industry by providing educational assistance and incentives. It creates a Public Service Loan Forgiveness program for mariners to recognize the vital public service performed by the industry. Additionally, a Student Incentive Payment Program would provide financial support to eligible students enrolled at state maritime academies.

Maritime Security

To address maritime security, the Act creates a Tanker Security Program with the dual goals of ensuring 1) uninterrupted operation of U.S. supply chains in peacetime and 2) availability of privately owned vessels to support national security strategies and strategic sealift capabilities. The Act also establishes a Maritime Security Trust Fund to provide sustained federal support for national transportation priorities through a dedicated source of funding for critical maritime security programs.

Collaboration and Coordination

The Act highlights the importance of collaboration between various stakeholders by appointing a Maritime Security Advisor to coordinate national maritime affairs and policy and collaborate with international allies and partners. It also creates a Maritime Transportation System National Advisory Committee responsible for coordinating government and private industry implementation of that National Maritime Strategy. The committee would bring together industry experts, government agencies and other stakeholders to develop a cohesive strategy for the maritime industry.

Environmental and Regulatory Reforms

The Act also addresses environmental and regulatory reforms by creating streamlined environmental reviews for shipyards and ship repair facilities intended to reduce bureaucratic hurdles and expedite maritime projects. The Rulemaking Committee on Commercial Maritime Regulations and Standards updates U.S. Coast Guard regulations in line with international maritime standards, thereby aligning domestic maritime regulations with global best practices and helping U.S.-flagged vessels compete in international commerce.

Interestingly, the Act also introduces new regulations to incentivize U.S.-flagged vessels to use U.S.-built engines. Though notable, this provision may have an unintended adverse effect of delaying completion of new vessel construction if the supply of U.S.-built marine engines falls short of demand. Additionally, the Act institutes a regulation that would require all vessels that are part of the Strategic Commercial Fleet to agree to operate only within the fleet exclusively in foreign commerce and not coastwise trade. This provision may have a cooling effect on some operators who would otherwise choose to affiliate with the fleet.

Financial Support and Incentives

The Act introduces financial support and incentive programs for the maritime industry through the Capital Construction Fund (CCF) and Investment Tax Credit Program. CCF would allow U.S.-flagged operators to defer taxable gain attributable to a vessel sale or loss if the funds contribute to expanding or modernizing the U.S. merchant fleet. Furthermore, the Investment Tax Credit would grant a 25 percent tax credit for any investment made by a taxpayer into a qualified domestic shipyard to attract private investment and support the growth of the U.S. shipbuilding industry. The Act also extends this tax credit to manufacturers that make critical components or equipment for such vessels.

The U.S. Trade Representative has implemented new measures on Chinese operators and shipowners, operators using Chinese-built vessels, foreign-built vehicle carriers and liquefied natural gas carriers to curb China’s influence in the maritime, logistics and shipbuilding sectors. (See Holland & Knight’s previous alerts, “USTR Announces Streamlined Notice of Action to Counter Chinese Dominance in the Maritime Sector,” April 21, 2025, and “U.S. Proposes Port Fees on Chinese-Built Ships and Operators to Counter China’s Shipping Dominance,” March 5, 2025.) The Act imposes a new tonnage tax penalty on vessels that are owned or operated by a country of foreign concern including, most notably, China. This penalty extends to vessel owners who conduct significant amounts of business with the China State Shipbuilding Corp. The Act further increases the duty penalties U.S.-flagged vessels must pay for repairs made in a foreign shipyard. Specifically, in foreign countries of concern, including China, the duty is increased to 200 percent, which is quadruple the current rate.

Strategic Sealift Programs

The Act promotes strategic sealift programs by creating the Strategic Commercial Fleet Program to oversee the national goal of expanding and maintaining a fleet of U.S.-flagged vessels capable of supporting military operations and transporting critical goods. The Act tasks the Military Sealift Command with assessing the merits of extending charter durations for certain vessels to maintain a ready reserve fleet and ensure the maritime industry can meet strategic sealift requirements. To support rapid expansion of the U.S.-flagged fleet, the Act also provides a mechanism by which foreign-built vessels can be reflagged in the U.S. for use under the Act during an interim period.

Conclusion

The Act closely mirrors the goals outlined in President Trump’s “Restoring America’s Maritime Dominance” EO. The Act outlines a comprehensive approach to revitalizing the U.S. maritime industry by focusing on shipbuilding, workforce development, maritime security, collaboration, environmental and regulatory reforms, financial support and strategic sealift programs. If passed, the Act will be a first-of-its kind initiative focused on restoring and growing American maritime prowess by leveraging U.S. government agencies, industry partners and educational institutions to meet national and economic security goals.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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