Coast Guard Ship Construction Could Move Overseas Under New National Security Exception

The “Ensuring Coast Guard Readiness Act” is short, but it packs a punch by chipping away at a long-standing rule requiring U.S. Coast Guard vessels to be built right here in the States. Currently, there’s a general ban on using foreign shipyards for these projects. This bill introduces a major exception: the President can now greenlight foreign construction if they decide it’s necessary for national security. This isn’t a blanket permission slip, though. The foreign shipyard must be in a NATO country or an Indo-Pacific nation with a mutual defense treaty with the U.S. Crucially, the cost of building the ship—or even just major parts like the hull—must be cheaper overseas than it would be domestically.

The National Security Loophole

This new exception hinges entirely on the President’s determination that foreign construction is “necessary for U.S. national security.” That’s a pretty broad term, and it gives the Executive Branch a lot of wiggle room to justify moving construction overseas, especially when combined with the cost requirement. Think of it like this: if the U.S. domestic shipbuilding industry is swamped with Navy contracts, or if a specific vessel design can be built faster and cheaper by an ally, the President can use this section to bypass the domestic requirement. For the Coast Guard, which often struggles with an aging fleet, this could mean faster, cheaper replacements, which is the clear benefit here.

Where the Jobs Could Go

While the Coast Guard might save a few bucks or get vessels quicker, this bill directly impacts U.S. domestic shipbuilding jobs and the industrial base. For a welder in Pascagoula or a pipefitter in Bath, this is a big deal because it removes a protection that guaranteed their work. The bill makes it clear that cost is a deciding factor alongside the national security justification. If a shipyard in France or South Korea can build a cutter for less, the President now has the authority to send that contract abroad, potentially weakening the U.S. capacity to build these vessels in the long run. Taxpayers might see initial savings, but the long-term cost could be a less robust domestic industrial base.

The China Certification

The bill includes a critical safeguard designed to address geopolitical concerns. Before any contract can be signed with a foreign shipyard under this exception, the Commandant of the Coast Guard must certify to Congress that the foreign entity isn't owned or controlled by the People’s Republic of China (PRC) or any multinational company based there. This is a clear move to prevent U.S. defense dollars—even those filtered through allies—from inadvertently supporting Chinese state-owned enterprises or giving the PRC insight into U.S. vessel specifications. Once the President makes the national security and cost determination, Congress gets a 30-day heads-up before the contract can be finalized, giving lawmakers a short window to review the decision and the required certification.