Is this an objective of Trump's tariffs?
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Daily Reckoning
11 Mar 2025
Not long ago, I had lunch with someone who currently has over $100 billion (yes, billion with a “b”) outstanding on capital projects.
Through his contracts and spending power, this guy buys steel by the tens of thousands of tons. Along the way, he moves aluminum and copper markets. Beyond basic metals, he procures train cars filled with machinery, electrical equipment and much else.
Indeed, this man shakes up markets, and I’ll tell you more in a moment. But first…
Trump’s Big Numbers
Let’s discuss Donald Trump and his love for big, round numbers. I recall watching video feed from a Trump campaign rally last fall, where the then-candidate predicted that future tariffs would bring $500 billion into federal coffers in a relatively short time.
Post-inauguration, in a January event led by the Orange Man himself, we heard about a $500 billion plan for investments in artificial intelligence. More recently, no less than Apple curried favor with No. 47, announcing $500 billion of future investment in the U.S.
Okay, if that kind of cash is the ante, let’s discuss another $500 billion play, namely American shipbuilding. Or rather, as I’ll explain below, “shipbuilding, shipbuilding, shipbuilding.”
Because now and looking ahead, there’s big money going into… yes… shipbuilding. We easily have half a trillion on the table, and likely more. Invest accordingly.
First, Fix the Navy!
According to John Phelan, the newly appointed Secretary of the Navy, “President Trump has texted me numerous times very late at night; sometimes after one in the morning. [He attaches photos] of rusty ships or ships in a yard, asking me, what am I doing about it? And I’ve told him… I will be very focused on it.”
Navy destroyer USS Stout (DDG 55) displaying rust streaks and weathered waterline (to be fair, after a long deployment). U.S. Navy photo.
TO be clear, Mr. Phelan’s challenge is not just battling rust, which is a perpetual challenge to the Navy. Indeed, the country’s problem with its sea service is far more than can be fixed just by chipping, scraping and painting.
Rusty or not, the Navy does not have enough ships. According to Phelan, “The president has been very consistent when he spoke with me: shipbuilding, shipbuilding, shipbuilding.”
In other words, right now the U.S. Navy is historically small, and struggling not to get smaller. In fact, in terms of ship construction the Navy operates barely at a pace to hold steady and not shrink as it confronts looming retirements of older vessels. All this while the world’s oceans remain as vast as they always were, with more and more challenges, missions and tasks for the Navy to perform.
How Big Is the Navy?
Currently, the U.S. Navy claims about 280 ships. The number is imprecise because it alone doesn’t tell the whole story.
Every month or two a ship launches or is decommissioned. And every week, one or more ships go into the yards for service, and will be out of use for a while. Or perhaps in that same week, one emerges from maintenance, ready to train a new crew and, eventually, perform its role as a greyhound of the sea.
A useful rule of thumb is that the Navy requires three ships to have one ready to go at all times. That is, there’s the one you see in video clips, out at sea, piercing the waves, performing missions, conducting drills, showing the flag.
Back in the U.S., a counterpart vessel is exercising its systems, training crew, “working up” to deploy and, sooner or later, relieve the ship that’s presently out there.
Plus, behind that second ship is a third one, possibly in a shipyard underdoing maintenance or upgrades, or perhaps just tied to a pier and surrounded by cranes and floating pollution barriers. Not uncommonly, maintenance requires that the hull be cut open by skilled workers with hot blowtorches, and then all sorts of machinery and gear gets swapped out which dictates that, for a time, the ship is not fit to sail.
In other words, your 280-ship Navy has about 90 to 100 ships mission-ready and operational. They’re assigned across a spread of seven different, numbered fleets, and those encompass the globe. So, the math of it all is quite tight; there’s not enough to go around.
Begin with the ocean realms near the U.S., where Navy ships do various things that range from chasing drug smugglers to tracking Russian submarines. And of course, many other Navy ships are posted to distant waters around Europe, if not the Mediterranean, Middle East, Indian Ocean, Pacific Ocean, and on occasion up to the Arctic and often down to Australia, if not the Great Southern Ocean. (Yes, I’ve been there.)
The short version of all this is that the Navy is assigned many missions in faraway places, and every day confronts the tyranny of distance to cross vast water space, and the time required to get there. Well, yes… because the world is big and there’s no surprise that people, policymakers and politicians debate the size of the Navy. Right now, the (mostly) bipartisan bottom line is that the Navy is Not Big Enough.
Trump Goes All-In on Building More Ships
The Navy must build more ships, and there’s a long-established office that does exactly that. It’s called “Program Executive Office, Ships” (PEO-Ships), located in the Pentagon with branch sites in the Navy Yard in Washington, D.C. and other locales. Its purview is Navy surface vessels: frigates, destroyers, cruisers, amphibious assault ships, oilers/tankers, cargo carriers, minesweepers, and an array of other specialty constructions.
Two types of ships that PEO-Ships does not construct are aircraft carriers, which have their own office, and submarines, again with a separate program office.
Which brings me to my recent meeting with Rear Admiral Thomas Anderson, USN, who runs PEO-Ships. He was in town to talk about shipbuilding, particularly one still under construction called USS Pittsburgh (LPD-31), the fifth Navy capital ship to bear that name.
Right now, RADM Anderson’s office has 74 Navy or Coast Guard ships under construction or contract, with payment obligations exceeding $100 billion. The supply chain involves over 5,400 distinct companies across the nation. These include recognizable names like Huntington Ingalls Industries (HII) and General Dynamics (GD) towards the top of the food pyramid, plus thousands more firms up and down the line.
For about three hours we discussed the Navy, ships and shipbuilding. Our time together included a presentation by the admiral to the Pittsburgh chapter of the Navy League (full disclosure: I’m the president of said Pittsburgh chapter).
Here are some takeaways, meaning my distillation of what the admiral said, and not directly quoting him or putting words in his mouth:
After the Cold War ended, the U.S. spent three decades scaling down its legacy industrial base, particularly for shipbuilding. It’s a long story, but right now military-capable shipyards are far fewer than in the olden days, while supply chains are thin and much of the overall labor force has aged and retired out.
Rebuilding the shipbuilding industrial base will require many years and a serious national effort from Capitol Hill and the Pentagon, all the way down to middle and high school trade classes in welding, electrical installation and much else. Shipbuilding needs skilled people, and the good news is that it pays very well.
Presently, Navy ship construction is painted into a corner, so to speak. To capture true efficiencies the military side of construction must have an industrial parallel on the commercial end such as yards that build tankers, cargo ships and the like.
Commercial economies of scale in shipbuilding definitely spill over into military construction in terms of supply chains, labor force, political support and more. Of course, the Navy works with what’s out there, but the current situation also creates bottlenecks and cost overruns.
President Trump and his administration appear to be all-in on the shipbuilding challenge, both military and commercial; refer to Mr. Phelan’s comments above. Indeed, Trump is setting up a shipbuilding office within the White House organization chart.
Take the current $100 billion for surface ships. Add another $150 billion of Navy money for future construction of aircraft carriers and submarines, and the military side will spend serious money in the years to come.
Now add another $250 billion on the commercial side of shipbuilding, which we can expect to flow via tax incentives and even tariffs that promote the U.S. shipbuilding and industrial base.
The takeaway is that we’re about to see a rebirth of shipbuilding in the U.S., with economic impacts that flow across the economy and benefit investors who understand the opportunity. It’s happening right now, as close as your nearest shipyard. And I’ll have more for you in future notes, as well as other newsletters like Strategic Intelligence and Lifetime Income Report.
That’s all for now. Thank you for subscribing and reading.
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“Shipbuilding, Shipbuilding, Shipbuilding” – Half a $Trillion Is in Play
by: Byron KingDaily Reckoning
11 Mar 2025
Not long ago, I had lunch with someone who currently has over $100 billion (yes, billion with a “b”) outstanding on capital projects.
Through his contracts and spending power, this guy buys steel by the tens of thousands of tons. Along the way, he moves aluminum and copper markets. Beyond basic metals, he procures train cars filled with machinery, electrical equipment and much else.
Indeed, this man shakes up markets, and I’ll tell you more in a moment. But first…
Trump’s Big Numbers
Let’s discuss Donald Trump and his love for big, round numbers. I recall watching video feed from a Trump campaign rally last fall, where the then-candidate predicted that future tariffs would bring $500 billion into federal coffers in a relatively short time.
Post-inauguration, in a January event led by the Orange Man himself, we heard about a $500 billion plan for investments in artificial intelligence. More recently, no less than Apple curried favor with No. 47, announcing $500 billion of future investment in the U.S.
Okay, if that kind of cash is the ante, let’s discuss another $500 billion play, namely American shipbuilding. Or rather, as I’ll explain below, “shipbuilding, shipbuilding, shipbuilding.”
Because now and looking ahead, there’s big money going into… yes… shipbuilding. We easily have half a trillion on the table, and likely more. Invest accordingly.
First, Fix the Navy!
According to John Phelan, the newly appointed Secretary of the Navy, “President Trump has texted me numerous times very late at night; sometimes after one in the morning. [He attaches photos] of rusty ships or ships in a yard, asking me, what am I doing about it? And I’ve told him… I will be very focused on it.”
Navy destroyer USS Stout (DDG 55) displaying rust streaks and weathered waterline (to be fair, after a long deployment). U.S. Navy photo.
TO be clear, Mr. Phelan’s challenge is not just battling rust, which is a perpetual challenge to the Navy. Indeed, the country’s problem with its sea service is far more than can be fixed just by chipping, scraping and painting.
Rusty or not, the Navy does not have enough ships. According to Phelan, “The president has been very consistent when he spoke with me: shipbuilding, shipbuilding, shipbuilding.”
In other words, right now the U.S. Navy is historically small, and struggling not to get smaller. In fact, in terms of ship construction the Navy operates barely at a pace to hold steady and not shrink as it confronts looming retirements of older vessels. All this while the world’s oceans remain as vast as they always were, with more and more challenges, missions and tasks for the Navy to perform.
How Big Is the Navy?
Currently, the U.S. Navy claims about 280 ships. The number is imprecise because it alone doesn’t tell the whole story.
Every month or two a ship launches or is decommissioned. And every week, one or more ships go into the yards for service, and will be out of use for a while. Or perhaps in that same week, one emerges from maintenance, ready to train a new crew and, eventually, perform its role as a greyhound of the sea.
A useful rule of thumb is that the Navy requires three ships to have one ready to go at all times. That is, there’s the one you see in video clips, out at sea, piercing the waves, performing missions, conducting drills, showing the flag.
Back in the U.S., a counterpart vessel is exercising its systems, training crew, “working up” to deploy and, sooner or later, relieve the ship that’s presently out there.
Plus, behind that second ship is a third one, possibly in a shipyard underdoing maintenance or upgrades, or perhaps just tied to a pier and surrounded by cranes and floating pollution barriers. Not uncommonly, maintenance requires that the hull be cut open by skilled workers with hot blowtorches, and then all sorts of machinery and gear gets swapped out which dictates that, for a time, the ship is not fit to sail.
In other words, your 280-ship Navy has about 90 to 100 ships mission-ready and operational. They’re assigned across a spread of seven different, numbered fleets, and those encompass the globe. So, the math of it all is quite tight; there’s not enough to go around.
Begin with the ocean realms near the U.S., where Navy ships do various things that range from chasing drug smugglers to tracking Russian submarines. And of course, many other Navy ships are posted to distant waters around Europe, if not the Mediterranean, Middle East, Indian Ocean, Pacific Ocean, and on occasion up to the Arctic and often down to Australia, if not the Great Southern Ocean. (Yes, I’ve been there.)
The short version of all this is that the Navy is assigned many missions in faraway places, and every day confronts the tyranny of distance to cross vast water space, and the time required to get there. Well, yes… because the world is big and there’s no surprise that people, policymakers and politicians debate the size of the Navy. Right now, the (mostly) bipartisan bottom line is that the Navy is Not Big Enough.
Trump Goes All-In on Building More Ships
The Navy must build more ships, and there’s a long-established office that does exactly that. It’s called “Program Executive Office, Ships” (PEO-Ships), located in the Pentagon with branch sites in the Navy Yard in Washington, D.C. and other locales. Its purview is Navy surface vessels: frigates, destroyers, cruisers, amphibious assault ships, oilers/tankers, cargo carriers, minesweepers, and an array of other specialty constructions.
Two types of ships that PEO-Ships does not construct are aircraft carriers, which have their own office, and submarines, again with a separate program office.
Which brings me to my recent meeting with Rear Admiral Thomas Anderson, USN, who runs PEO-Ships. He was in town to talk about shipbuilding, particularly one still under construction called USS Pittsburgh (LPD-31), the fifth Navy capital ship to bear that name.
Right now, RADM Anderson’s office has 74 Navy or Coast Guard ships under construction or contract, with payment obligations exceeding $100 billion. The supply chain involves over 5,400 distinct companies across the nation. These include recognizable names like Huntington Ingalls Industries (HII) and General Dynamics (GD) towards the top of the food pyramid, plus thousands more firms up and down the line.
For about three hours we discussed the Navy, ships and shipbuilding. Our time together included a presentation by the admiral to the Pittsburgh chapter of the Navy League (full disclosure: I’m the president of said Pittsburgh chapter).
Here are some takeaways, meaning my distillation of what the admiral said, and not directly quoting him or putting words in his mouth:
After the Cold War ended, the U.S. spent three decades scaling down its legacy industrial base, particularly for shipbuilding. It’s a long story, but right now military-capable shipyards are far fewer than in the olden days, while supply chains are thin and much of the overall labor force has aged and retired out.
Rebuilding the shipbuilding industrial base will require many years and a serious national effort from Capitol Hill and the Pentagon, all the way down to middle and high school trade classes in welding, electrical installation and much else. Shipbuilding needs skilled people, and the good news is that it pays very well.
Presently, Navy ship construction is painted into a corner, so to speak. To capture true efficiencies the military side of construction must have an industrial parallel on the commercial end such as yards that build tankers, cargo ships and the like.
Commercial economies of scale in shipbuilding definitely spill over into military construction in terms of supply chains, labor force, political support and more. Of course, the Navy works with what’s out there, but the current situation also creates bottlenecks and cost overruns.
President Trump and his administration appear to be all-in on the shipbuilding challenge, both military and commercial; refer to Mr. Phelan’s comments above. Indeed, Trump is setting up a shipbuilding office within the White House organization chart.
Take the current $100 billion for surface ships. Add another $150 billion of Navy money for future construction of aircraft carriers and submarines, and the military side will spend serious money in the years to come.
Now add another $250 billion on the commercial side of shipbuilding, which we can expect to flow via tax incentives and even tariffs that promote the U.S. shipbuilding and industrial base.
The takeaway is that we’re about to see a rebirth of shipbuilding in the U.S., with economic impacts that flow across the economy and benefit investors who understand the opportunity. It’s happening right now, as close as your nearest shipyard. And I’ll have more for you in future notes, as well as other newsletters like Strategic Intelligence and Lifetime Income Report.
That’s all for now. Thank you for subscribing and reading.
