New Maritime Bill Slaps Up to 200% Tax on Foreign Ship Repairs, Mandates U.S. Ships for 100% of Government Cargo

The Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act of 2025—or the SHIPS for America Act—is a massive piece of legislation designed to completely overhaul the U.S. maritime industry. It creates a dedicated multi-billion dollar fund, sets up new high-level government oversight, and throws significant financial incentives at domestic shipyards and mariners. The core purpose is clear: to ensure the U.S. can build, crew, and operate the vessels needed for national security and economic stability, reducing reliance on foreign supply chains.

The New Maritime Power Structure

This bill doesn't just shuffle funds; it centralizes power. It establishes a Maritime Security Trust Fund (capped at $20 billion) to finance its programs, funded largely by new tonnage taxes and penalties. More critically, it creates a Maritime Security Advisor in the Executive Office of the President and a powerful Maritime Security Board (SEC. 101). This board, featuring leaders from Defense, the Coast Guard, and Commerce, will set annual targets for the U.S. security fleets and oversee all federal maritime policy. For those who worry about bureaucracy, this is a major consolidation of authority—and some key decisions made by this new structure regarding sealift acquisition and maintenance are explicitly protected from judicial review (SEC. 301), meaning no court can second-guess them.

The Cost of Foreign Ties: New Taxes and Tariffs

If you own or operate a vessel with ties to certain geopolitical rivals, this bill hits your bottom line directly. The Act introduces steep new penalty tonnage taxes on ships connected to a “foreign entity of concern” or a “foreign shipyard of concern” (SEC. 202). These penalties are uncapped and applied on top of existing taxes, potentially reaching $5.00 per ton, depending on the vessel’s history and ownership. For example, if a shipping company has 50% of its future orders coming from a designated “shipyard of concern,” every vessel in its fleet could face the highest penalty rate.

Even more immediate is the change to ship repair duties (SEC. 404). The standard duty on foreign repairs jumps from 50% to 70%. But if that repair happens in a “foreign country of concern,” the duty skyrockets to 200% of the repair cost. This is a clear signal: the U.S. government wants repair work done domestically, and it’s willing to use massive financial disincentives to make that happen. Vessel owners can temporarily avoid the 70% duty if they certify they tried to use a U.S. shipyard first, but the 200% penalty for repairs in a concerning country is non-negotiable.

Shipping Your Stuff: The 100% American Cargo Rule

For federal agencies that ship goods—like the Department of Defense or those sending food aid—the rules are getting dramatically tighter. The minimum requirement for using U.S.-flagged vessels for government-sponsored cargo jumps from “at least 50 percent” to 100 percent (SEC. 411). This change kicks in 180 days after enactment. This means every barrel of oil, every tank, and every bag of food aid covered by the rule must move on an American ship, unless the Maritime Administrator grants a temporary emergency waiver.

In a move that could affect consumer costs, the bill also mandates that a growing percentage of goods manufactured in China and imported to the U.S. must arrive on a U.S.-built, U.S.-crewed vessel. This requirement starts at 1% five years after enactment and climbs to 10% after 14 years (SEC. 415). While 1% seems small, forcing cargo onto more expensive U.S.-flagged ships will inevitably raise the cost for importers, potentially leading to higher prices for consumers down the line.

Tax Breaks for Builders, Relief for Mariners

To back up these mandates, the bill provides massive financial sweeteners. It creates a new U.S. Vessel Investment Credit (SEC. 701) that offers a tax credit of up to 40% for building, repowering, or reconstructing qualified U.S.-flagged vessels in U.S. shipyards. There is also a new Shipyard Investment Tax Credit (SEC. 706) providing 25% of the qualified investment for facilities that build or repair ocean-going vessels.

For the workforce, the bill offers practical relief. Merchant Mariners are now eligible for the Public Service Loan Forgiveness (PSLF) program (SEC. 601), provided they work at least 150 days a year on a U.S. vessel. This is a huge win for mariners who often graduate from academies with significant student debt. The bill also authorizes over $1 billion for a 10-year modernization plan for the U.S. Merchant Marine Academy (SEC. 621) and mandates a new Merchant Marine Career Retention Program to keep skilled sailors ready for national emergencies (SEC. 606).