Steel Traps: America’s Fraught Quest for Maritime Dominance

IISS | Jonathan Caverley, Peter Dombrowski

President Donald Trump has unveiled the "Golden Fleet" initiative and expanded foreign shipyard partnerships under the "Finland Model" to revitalize lagging American naval capacity. This dramatic policy pivot follows operational vulnerabilities in the Strait of Hormuz and a widening commercial shipbuilding disparity with Beijing. Chinese yards delivered 981 ocean-going merchant vessels in 2025 while the United States produced just two.

The US Navy struggles with overstretched shipyards, severe maintenance backlogs, and depleted munitions inventories. Commercial subsidies cannot easily overcome vast structural disadvantages. American manufacturing wages remain 23 times higher than India's, while domestic steel costs two-thirds more and suitable coastal land is scarce. Relying on protectionist trade tools, heavy surface combatants, and steam catapults risks locking Washington into an obsolete operational posture while anti-ship capabilities proliferate worldwide. Perversely, aggressive domestic shipbuilding mandates will further entrench Chinese maritime market power while eroding long-term American naval strength.

Comment

The acquisition of the Philadelphia shipyard by South Korea’s Hanwha Ocean exposes the fundamental friction in importing foreign shipyard capital to revive American naval production. While the "Finland Model" attempts to bridge output deficits through licensed onshore fabrication, domestic yards lack the specialised labour force and supply chains required for high-complexity hull construction. Facilities like Philadelphia are consequently restricted to assembling pre-fabricated modules shipped directly from Geoje rather than cultivating independent manufacturing capacity.

This operational bottleneck stems from systemic cost differentials where American steel prices exceed Asian benchmarks by two-thirds and domestic shipbuilding wages remain disproportionately inflated. Modular assembly at Philadelphia fails to transfer core manufacturing competencies, leaving the fleet reliant on foreign supply chains for critical sub-assemblies. Licensed assembly initiatives at Hanwha-managed facilities ultimately subsidise overseas shipbuilders without expanding domestic hull fabrication capacity.

Strategic Question for Discussion

If the Finland Model fails to transfer primary fabrication technology from yards in Geoje to the Philadelphia shipyard, which factor will constrain US naval expansion more: structural labour costs or supply chain dependencies?

The available evidence points toward supply chain bottlenecks as the more intractable constraint on American naval expansion. While high domestic wages inflate construction budgets, the complete absence of onshore sub-tier suppliers for specialised components creates hard limits on surge production at facilities like the Philadelphia shipyard. Consequently, licensed manufacturing models remain vulnerable to foreign material disruptions regardless of domestic capital investment.

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