America’s Shipbuilding Revival Isn’t About Ships

The Trump administration is urgently touting American shipbuilding as a priority, but this focus risks missing the critical moment. The pivotal opportunity is nuclear propulsion, and realizing it requires immediate, robust institutional investment before technological advances slip from US control.

The debate about American shipbuilding revival has settled into a familiar script. Chinese yards captured 70 percent of global newbuild orders by compensated gross tonnage in 2024. They delivered more than half of all commercial tonnage worldwide. The US accounts for only a fraction of a percent of either measure. The proposed solution is to subsidize American yards to help them restore their relevance. The SHIPS for America Act and the Trump administration’s maritime executive order all share one goal: close the gap with China on conventional commercial shipbuilding. Hanwha’s $5 billion investment in Philadelphia shares this goal.

That goal is worth pursuing. But as a standalone strategy, it is almost certainly unwinnable, and the clock is ticking.

China’s dominance was engineered over two decades. Academic research estimated subsidies at $91 billion from 2006 to 2013. These included below-market land, subsidized steel, export credits, and buyer financing. In 2019, China merged its two largest shipbuilding conglomerates. This created CSSC, a single state-owned entity. CSSC now has the largest share of new global orders and is fully booked through 2028. Clarksons Research data show that Chinese yards deliver similar ships at as little as one-sixth the cost of American yards. The Matson container ships built at Philadelphia Shipyard in 2022 cost about $333 million each. Comparable tonnage built in China costs roughly $55 million. No plausible mix of tax credits and port fees closes that gap. This holds especially true in vessel categories where China competes.

There is one critical category where China does not yet compete. Here, the United States holds a fleeting structural advantage that no industrial policy can easily replicate. That category is nuclear propulsion. Our analysis is clear: the window for US leadership in nuclear propulsion is narrow and rapidly closing. It will slam shut once the first demonstration vessels deploy in the early 2030s and international standards are set, likely by whoever deploys them first.

The economics of nuclear propulsion are no longer theoretical.

For most of the past century, the case for nuclear-powered commercial ships ran aground on the same reef: cheap oil made it uncompetitive. The NS Savannah demonstrated flawless nuclear operation from 1962 to 1972 while losing roughly $2 million annually against bunker fuel priced at $20 per metric ton. Had oil stayed cheap, that would have been the end of the story.

It did not stay cheap, and the regulatory environment has added a second cost layer that conventional propulsion cannot escape.

In 2025, Lloyd’s Register, LucidCatalyst, and Seaspan published a rigorous analysis of nuclear propulsion economics for a 15,000 TEU container vessel. Their modeling found nuclear propulsion could eliminate up to $50 million in bunker fuel costs each year. It could also save up to $18 million in carbon penalties. Combined, that means savings of roughly $68 million per year at current fuel prices and carbon penalty levels. This figure is model-dependent and will move with oil markets and carbon regulation. The direction, however, is clear.

Fuel already accounts for 46 to 60 percent of container ships' total operating costs. A large vessel burns 150 to 200 tonnes per day at slow-steaming speeds. The European Union Emissions Trading System will be extended to shipping in 2024. It will phase to full coverage in 2026. Current allowance prices are €70 to €95 per tonne of CO₂. The IMO’s Net-Zero Framework, approved in April 2025, introduces carbon levies of $100 per tonne for partially compliant vessels and $380 per tonne for non-compliant ones. Collection starts in 2028. Nuclear propulsion delivers zero emissions across all categories. A vessel built today for 25-year service will spend its entire operating life in a world where carbon carries a real and rising price.

Nuclear propulsion enables 25 knots, unlike the 18-knot slow-steaming pace of conventional economics. Lloyd’s Register’s analysis found that this alone increases annual cargo capacity by about 38 percent. This means six and a third round voyages annually versus five. Nuclear propulsion also frees an additional 5% of container space by removing fuel tanks. The revenue implications are as significant as the cost savings.

The capital challenge is immediate and daunting. First-of-a-kind reactor costs range from $5,000 to $8,000 per kilowatt-electric, requiring a substantial premium over conventional propulsion. The economic case hinges on reaching scale rapidly about 1,000 reactor units before the opportunity passes. Waiting risks locking out US leadership. The power-leasing model is the industry’s proposed bridge, but it requires urgent institutional investment. Delay risks forfeiting a generational leadership position.

The bottleneck is a diplomat’s problem, not an engineer’s

Here is where the standard narrative about nuclear shipping goes wrong. Several reactor designs have received Approvals in Principle from Lloyd’s Register, ABS, and DNV. These include HD Korea Shipbuilding & Offshore Engineering’s SMR-powered container ship, Newcleo’s lead-cooled fast reactor, and Core Power’s molten chloride system in development with TerraPower and Southern Company. The Department of Energy’s Naval Nuclear Propulsion Program has more than 7,500 reactor-years of operation. It has covered 210 nuclear-powered ships and 177 million miles with zero reactor accidents since 1948. The IMO’s Maritime Safety Committee amended SOLAS in June 2025 to open the door to SMR technologies. The broad technology problem is not the binding constraint.

No nuclear merchant ship can currently transit the Suez or Panama Canals, and this harsh reality cannot be fixed by technology alone. Many important waterways remain closed to nuclear ships, not because of engineering, but because there is no international legal framework. This regulatory gap must be closed now, before others define the terms. The United States cannot wait: the 1962 Brussels Nuclear Ship Convention has never entered into force; the IMO’s 1981 Code remains unfinished; operators shoulder full, unlimited liability despite exclusions to major conventions persisting. Insurers won’t cover radiological risk. Major nations and treaties ban nuclear vessels from entering critical trade routes. The time to influence these frameworks is rapidly running out.

The gap between naval and commercial port access is not a technical matter. The Naval Nuclear Propulsion Program has shown that US nuclear vessels can operate safely in more than 150 ports across 50 countries under sovereign military frameworks negotiated over decades. The German research vessel Otto Hahn logged 650,000 nautical miles across 33 ports in 22 countries between 1968 and 1979, with no technical failures. Yet it was never permitted to transit the Suez or Panama Canals and required individually negotiated bilateral agreements for each port. That vessel’s legacy is not a warning about nuclear technology. It shows the institutional problem, a diplomatic failure that appears to be an engineering one.

The industry is mobilizing in response. The Nuclear Energy Maritime Organization was granted IMO NGO status in July 2025 and is working with insurers toward a fit-for-purpose liability framework. Lloyd’s Register published its first nuclear shipping roadmap the same year. To seize the US advantage, policymakers should make international nuclear shipping regulation a diplomatic priority now and invest in the frameworks and alliances needed before the 2030 deployment window closes. The United States should explicitly lead the effort to establish a global legal and insurance framework for nuclear-powered commercial vessels.

The risk isn’t China's Manufacturing Ability. It’s South Korea in the near term.

China’s nuclear shipbuilding ambitions are real. CSSC’s Jiangnan Shipyard unveiled the KUN-24AP, a 24,000 TEU container ship concept powered by a 200-megawatt thorium molten salt reactor. It received Approval in Principle from DNV. China’s land-based thorium MSR prototype achieved full power operation in 2024. These are actual developments.

They are also not the primary competitive threat during the critical 2030 to 2035 window. The Jiangnan vice president indicated that construction of KUN-24AP would not begin for roughly a decade. Thorium molten salt reactor technology is less commercially mature than pressurized water or fast reactor variants. And China faces a trust deficit in nuclear safety culture, nonproliferation, and regulatory transparency that no amount of state backing can resolve quickly, particularly in the European and allied markets that would need to accept Chinese nuclear vessels into their ports for the economics to work. China is the long-run risk. For the window that matters, our assessment is that the more immediate danger is South Korea.

South Korea holds 17 percent of global newbuild orders, second globally, and delivers world-class quality with a workforce that already builds the most technically demanding vessels afloat, including the majority of the world’s LNG carriers. All three of Korea’s major builders, HD Korea Shipbuilding & Offshore Engineering, Hyundai Heavy Industries, and Samsung Heavy Industries, have active nuclear ship programs with reactor developer partnerships. HD KSOE has received Approvals in Principle from both ABS and DNV for a 15,000 TEU SMR-powered containership. Hanwha Group acquired Philadelphia Shipyard in December 2024 and announced a $5 billion infrastructure expansion in August 2025, targeting up to 20 vessels annually, including LNG carriers. Korea has both the reactor development momentum and the yard capacity to put the world’s first commercially viable nuclear cargo ship into service. It is not waiting.

The window during which the United States can credibly shape the international framework, the port access conventions, the liability instruments, the insurance standards, and the reactor certification pathways appears, on current trajectories, to close around the point when first vessels deploy, and operating experience begins to define what the rules must accommodate. Standards set before the first vessels deploy become the global standard. Standards that emerge after deployment get written by whoever deployed first. The nation that writes the rules for nuclear shipping will hold a structural advantage for the life of the vessels that comply with them, which means 25 to 30 years. The urgency is not rhetorical. It is the period before the first Korean nuclear vessel orders are placed, before the IMO framework is locked, and before the intellectual property is priced into commercial agreements that the US has no seat at.

America’s advantage is the propulsion system, not the ship.

The correct framing of a US nuclear maritime strategy is not “how do we build more ships than China?” It is “how do we own the layer of the value chain that China cannot replicate through industrial subsidy?” The manufacturing value chain in nuclear shipbuilding is a stack of layers with fundamentally different competitive characteristics.

Hull fabrication, the steel-bending, welding, and outfitting that defines conventional shipbuilding, can be subsidized. It can be cost-competitive. China has demonstrated this comprehensively over two decades. The layers above it cannot be acquired through the same mechanism. Reactor module manufacturing requires precision machining, nuclear-grade quality assurance culture, and supply chains that take a decade to certify. It cannot be outsourced to a lower-cost country without transferring the intellectual property that makes it valuable. The nuclear-certified maritime workforce reactor operators, health physicists, and NRC-licensed engineers are built on an institutional foundation that no competitor can replicate quickly. The Bettis and Knolls Atomic Power Laboratories, the research and engineering core of the Naval Nuclear Propulsion Program, employ nearly 8,000 engineers, scientists, technicians, and support personnel devoted entirely to naval nuclear propulsion work. The broader program encompasses nuclear-qualified workforces at six shipyards, prototype training facilities, and a continuous active-duty pipeline through the Nuclear Power School in Charleston. No industrial policy creates that in a five-year window. And the regulatory standards layer, including the IMO frameworks, the classification society codes, and the national licensing regimes, accrue permanently to the nations that write them. Once a certification pathway is established using American reactor designs and American safety standards, every allied nation building nuclear ships is effectively building to American specifications.

This is the manufacturing revival argument properly understood. The Trump administration is correct that shipbuilding is a strategic industrial base question and that China’s dominance represents a national security risk. Where current policy has not yet gone far enough is in recognizing that the path to a durable US position runs through the reactor, not the hull. The SHIPS for America Act’s investment tax credits and the April 2025 executive order’s Maritime Security Trust Fund are necessary conditions. They are insufficient unless explicitly directed toward nuclear-capable yards and nuclear-certified workforce development, not simply toward any shipyard that employs American workers building conventional vessels that cannot compete on price.

The comparison with South Korea is instructive rather than threatening. Korea’s entry into the US shipbuilding market through the Hanwha-Philadelphia relationship can be structured as the seed of a bilateral nuclear maritime alliance in which Korean yards provide hull and outfitting expertise while American reactor IP powers the propulsion, or it can become the mechanism by which Korea gradually captures both sides of the equation. Which outcome materializes depends on whether the technology transfer and IP agreements structuring that relationship are written with American nuclear intellectual property at their center. That negotiation is live.

Three decisions in the next 24 months

The United States does not need to build a thousand nuclear ships to win this market. It needs to be the nation that certifies the first ones, writes the rules that govern them, and trains the workforce that operates them. Three decisions made in the next two years determine whether that outcome is achievable.

The first is at the Department of Energy. The $170 million MCRE investment at Idaho National Laboratory, the Molten Chloride Reactor Experiment, developed with TerraPower and Southern Company, is the most advanced US maritime-applicable reactor program under development and is well-targeted. But the MCRE investment currently lacks an explicit maritime certification pathway. A reactor that achieves criticality at Idaho National Lab and a reactor that can be classified by ABS for a 15,000 TEU containership are separated by years of additional engineering work that is not currently funded or planned. Ask the team how many years and how many dollars stand between MCRE and a vessel-ready certified design. If the answer is unclear, the investment is incomplete.

The second is at the USTR. The Section 301 fees on Chinese-built and Chinese-operated vessels are projected to cost the shipping industry roughly $30 billion annually, a pressure intended to shift demand away from Chinese tonnage. That pressure means nothing if there is no American nuclear alternative ready when demand shifts. A portion of the Maritime Security Trust Fund revenue should be explicitly directed toward IMO framework negotiations, port-access diplomacy with Pacific allies, and the maritime liability legislation that would extend Price-Anderson-style nuclear liability coverage to commercial nuclear vessels. Fee revenue used exclusively for yard subsidies builds capacity without the institutional infrastructure to deploy it. The port access problem does not solve itself through tariffs.

The third is in the relationship with South Korea. The Hanwha-Philadelphia investment is the most significant concrete development in US commercial shipbuilding in a generation, and it deserves to be treated as such. It is also the opening move in a negotiation about who owns the technology at the center of the next generation of maritime propulsion. The US government holds leverage it has not yet deployed: access to the Naval Nuclear Propulsion Program's institutional knowledge, DOE's advanced reactor co-investment authority, and the export licensing authority that governs what nuclear technology leaves the country under what terms. That leverage is most valuable before the commercial nuclear ship market exists. Once it does, the terms shift decisively in favor of whoever has production capacity. Structured correctly with American nuclear IP at the center and explicit technology-transfer protections, the Hanwha relationship is the fastest, most credible path to a US nuclear shipbuilding base. Structured carelessly, it is a long-term subsidy to a competitor with better yards.

America has not yet lost a race it has not yet entered. It offers advantages no industrial subsidy can match: seven decades of nuclear marine engineering, the world’s only proven naval nuclear propulsion institution, and the diplomatic standing to shape international rules before anyone else has written them. The question for policymakers is whether Washington treats this as the strategic industrial opening it is or continues pouring resources into a conventional shipbuilding competition that was decided two decades ago.