Trump plans to rejuvenate U.S. shipbuilding may run aground on rocks of Navy problems

President Donald Trump’s announcement to "make American shipbuilding great again" will face significant headwinds due to a deeply flawed U.S. Navy and a sclerotic defense industrial base that experts say is not currently ready to challenge Chinese dominance in this arena, after a new government watchdog report highlighted the deep problems facing the Navy and the private sector.

Trump made the announcement on Tuesday evening about the need "to boost our defense industrial base we are also going to resurrect the American shipbuilding industry, including commercial shipbuilding and military shipbuilding."  

“And for that purpose, I am announcing tonight that we will create a new office of shipbuilding in the White House that offers special tax incentives to bring this industry home to America where it belongs.”

According to analysts at IBISWorld, military shipbuilding accounts for the industry "relies heavily on government contracts, with military contracts accounting for nearly 80% of total industry revenue." Most of the government contracts come from the Department of Defense, specifically the Department of Navy. 

Severe problems at Department of Defense and Navy

The U.S. faces increased challenges at sea posed by Iran and its proxies in the Middle East and by an increasingly assertive Chinese fleet, while the Navy is currently unable to meet its goals to build more much-needed ships.

The Government Accountability Office (GAO) released a nearly 100-page report in late February which detailed massive challenges facing the Defense Department and the severe problems plaguing the Navy’s shipbuilding. The GAO reports says those problems include: 

• Laying out billions of dollars in cost overruns; 

• Repeated failures to meet naval shipbuilding expansion targets;

• A potentially costly lack of coordination between the Navy and the Office of the Secretary of Defense (OSD); and

• A lack of evidence that the money increasingly being shoveled into shipbuilding is having the impact that it should, among other problems.

Production would have to double to meet goals

The GAO noted that “the Navy’s shipbuilding plans have consistently reflected a larger increase in the fleet than the industrial base has achieved, yet the Navy continues to base its goals on an assumption that the industrial base will perform better on cost and schedule than it has historically.” In one failure, the report noted that, by 2026, “the Navy expects to have no more ships than it did when it released its first 30-year shipbuilding plan in 2003.”

Because the Navy plans to decommission 292 ships during the thirty-year timeframe where it plans to simultaneously expand the fleet by 91 ships, the GAO noted that the Navy will actually need to deliver a total of 383 ships in thirty years to reach its goal. 

The GAO said that private industry delivered seven new battle force ships in 2023, but that it would have to nearly double that to an average of roughly 13 ships per year for thirty years to meet the fleet size goal under the current shipbuilding plan.

The report noted that “the industrial base has yet to demonstrate an ability to increase production in this manner” and that “none of the shipbuilders are currently positioned to meet the Navy’s delivery goals.” 

China's formidable shipbuilding capacity

The Trump administration is reportedly drafting an executive order aimed at tackling these shipbuilding challenges and targeting Chinese commercial shipping dominance, The Wall Street Journal said. The order is purportedly slated to form an office at the National Security Council dedicated to strengthening the American maritime industry and direct Elon Musk’s Department of Government Efficiency to review the Navy’s procurement processes to remedy inefficiencies and trim waste.

China has used its formidable military and commercial shipbuilding capacity to assemble the world’s largest naval force of more than 400 warships and support vessels, according to an analysis by the Center for Strategic and International Studies. The smaller U.S. fleet clocks in at around 296 warships and support vessels, despite the Navy’s 2025 shipbuilding plan calling for a fleet of 381 battle force ships. U.S. ships represent less than 1% of the world's commercial ships today, according to a Journal analysis in December.

The new GAO report noted that from 2007 to 2018, shipbuilding costs exceeded Navy estimates by more than $11 billion. GAO says this pattern has continued in recent years, including cost overruns in building Ford class carriers such as the USS John F. Kennedy by as much as $1.3 billion in 2021. The defense industry journal Jane's said in 2022 that "As of September 2021, the navy increased the cost cap for the second Ford-class carrier, John F. Kennedy by $1.3 billion “primarily due to contract overruns.”

The GAO noted that the Navy has nearly doubled its budget in the more than twenty years since 2004, yet shipbuilding capacity has not markedly improved, and “although the Navy spends billions annually to sustain its ships, our work has found persistent sustainment challenges across the surface fleet, including maintenance delays and degraded material condition.”

The report said the Pentagon spent over $5.8 billion on the shipbuilding industrial base between 2014 through 2023, and that it plans to spend a further $12.6 billion through 2028. But the GAO said that, despite the Pentagon spending billions to support the shipbuilding industrial base, “it has yet to fully determine the effectiveness of that support (i.e., its return on investment)” — a glaring problem, given the scale of the challenge and the vast sums of money involved. The report contended that “the Navy does not track all its investments, and both the Navy and OSD have yet to fully measure return on investment.”

The watchdog report assessed that the Navy and OSD “are not fully coordinating their shipbuilding investments to prevent duplication or overlap in spending,” including related to building submarines and surface ships. Additionally, the GAO said that “the Navy has yet to fully establish performance metrics, such as measurable targets that link to the agency’s goals that would enable it to consistently evaluate the effectiveness of its investments in building a larger fleet.”

Navy's 2025 plan cost 46% more than average over last five years

In a bipartisan effort chairman of the House Select Committee on the Chinese Communist Party Rep. John Moolenaar, R-Mi., and ranking member Rep. Raja Krishnamoorthi, D-Il., assessed in late February that “due to its aggressive non-market policies, the People’s Republic of China controls over 50 percent of the world’s shipbuilding, while the U.S. accounts for just 0.2 percent” and that “for every large ocean-going vessel built in America each year, the PRC builds 359.”

The Congressional Budget Office (CBO) also released a bleak report in January, finding that the Navy’s current 2025 plan would cost 46 percent more annually than the average amount that has been appropriated by Congress over the past five years. The CBO also estimated that “total shipbuilding costs would average $40 billion over the next 30 years, which is about 17 percent more than the Navy estimates.” The CBO said that the Navy’s total budget would need to increase from $255 billion today to $340 billion in 2054 to implement the Navy’s 2025 plan.

The PRC is capable of building warships at a rate more than 200 times greater than the United States, according to an assessment from U.S. naval intelligence leaked to The War Zone. The unclassified graphic shows China’s shipyards have a capacity of approximately 23.25 million compared to the U.S. capacity of roughly just 100,000 tons. Just the News has not been able to independently verify the provenance of the chart.

But with Secretary of Defense Pete Hegseth vowing to restore lethality at the Pentagon and to address the China threat, with Elon Musk’s DOGE seeking to cut waste and fraud from federal spending, and finally, with Trump’s renewed focus on American naval power, all three influences may ease the Navy’s shipbuilding woes by getting more legislative attention.