A liquefied natural gas tanker is tugged toward a thermal power station in Futtsu, east of Tokyo.
Issei Kato | Reuters
The Trump administration is touting commitments by foreign nations for future large purchases of U.S. energy as part of recent trade deal frameworks, including with the EU, Indonesia, and South Korea, but a separate recent mandate from the U.S. Trade Representative to promote domestic shipbuilding may stand in the way of making those liquified natural gas shipments reality.
The USTR policy mandates that 1% of U.S. LNG exports be carried on U.S.-flagged ships starting in April 2028, and a year later, 1% needs to be transported on U.S.-built ships. Subsequent annual increases of 1% would reach a total of 15% of U.S. LNG required to be on U.S.-built vessels by 2047.
“The requirement of U.S.-built ships to move the country’s LNG and crude is problematic,” said Jason Feer, global head of business intelligence for Poten & Partners, a company specializing in energy market analysis and consulting, particularly in the LNG sector.
The U.S. government’s new shipbuilding policy was undertaken as part of an investigation into China’s dominance in the shipbuilding industry, as part of the broader national security concerns of the U.S. government (the Biden administration was pursuing the issue as well and released a report in January 2025 stating its recommendations). China manufactures as much as 75%-80% of global freight fleets. In April, Trump announced the new USTR policy to rebuild America’s shipbuilding industry.
On Capitol Hill, Senator Mark Kelly (D-AZ), Senator Todd Young (R-IN), Representative John Garamendi (D-CA-8), and Representative Trent Kelly (R-MS-1) introduced the Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act to close the gap with international builders through a series of programs.
There is only one U.S.-flagged LNG vessel currently operating, Crowley’s American Energy, but it was made in France in 1994 and began service in March 2025 to carry LNG from the U.S. Gulf Coast to Puerto Rico. It is a Jones Act vessel, which means that, based on the 1920 maritime commerce law covering shipments between U.S. ports, it needs to be staffed by a U.S. captain and crew, and registered in the U.S., to be U.S.-flagged.
The current number of LNG carriers operating globally is 682, according to Poten & Partners. Only one of those vessels, the LNG Aquarius, was built by the United States. The LNG Aquarius was ordered on July 1, 1974, and delivered by General Dynamics on June 7, 1977. The vessel currently sails under the Indonesian flag, based on MarineTraffic vessel information.
By 2047, Poten & Partner estimates the U.S. would need 45 vessels to move the 15% of LNG required by the USTR guidelines. Currently, there is only one U.S. vessel on the global order books out of a total of 331 planned vessels, Feer said. On paper, he added, the number of LNG vessels on the order books “looks good” to support a U.S. energy export expansion. But under the new USTR guidelines, these vessels would not be eligible.
Hanwha Shipping, a U.S. subsidiary of South Korea’s Hanwha Ocean, is now building a domestic liquefied natural gas carrier through its affiliate, Hanwha Philly Shipyard. This vessel will be the first U.S.-ordered, export market-viable LNG carrier in almost 50 years. A second possible LNG vessel could also be ordered.
Based on the history of LNG shipbuilding, it takes approximately two and a half years for an LNG vessel to be built.
“Globally, you can build a lot of ships to support an expansion, but the problem is it has to be built in a U.S. shipyard, and the U.S. has not built a commercial ocean-going vessel in decades,” said Feer. “In that time, we have lost a lot of shipbuilding capacity, and the yards we have open are used for building Jones Act domestic ships and the Navy.”
Another hurdle, Feer said, is the constraints in hiring skilled labor. “There are not enough craft workers — pipefitters, carpenters, welders. Trying to build all of this, on top of a set deadline, is going to be a huge challenge,” he said.
The costs associated with that skilled labor will also be a factor. It costs around $260 million to build an LNG vessel, according to industry estimates. A U.S.-made vessel can be approximately two to four times more expensive.
Feer says there needs to be more clarity on what constitutes a U.S.-made vessel within the USTR mandate.
“Could the majority of the vessel be manufactured overseas and completed in the U.S.? Is it a U.S.-made engine? How many of the LNG vessels made by Hanwha would be made in Korea and finished here? It is unclear how feasible the USTR mandate is,” he said.
Louis Sola, former Federal Maritime Commission Commissioner appointed by President Trump, and now a partner at lobbying firm Thorn Run Partners, tells CNBC the math doesn’t work.
“The question everyone is asking is simple,” Sola said. “Can the U.S. actually build enough LNG carriers fast enough under the SHIPS Act without shooting ourselves in the foot? We’ll need as many as 50 vessels by 2050. Korean and Japanese yards already take over two years per ship and are booked solid, and we don’t currently build this class here whatsoever,” he added.
The USTR did not respond to a request for comment.
“Without some common-sense flexibility or a phased-in approach, the math just doesn’t add up. We risk bottling up our own LNG exports and opening the market to the competition right when our allies need American energy the most,” Sola said.
According to BIMCO, the largest association for global ship owners, U.S. exports comprise up to 27.5% and 9.5% of global LNG and crude tanker demand, respectively. The U.S. predominantly uses South Korean LNG vessels to move the commodity.
Overall, 78% of the LNG fleet is built in South Korea, while 13% and 7% are from Japan and China, respectively, according to BIMCO. South Korean shipyards also dominate the order book, with 64% of capacity on order, but Chinese shipyards are increasingly getting orders and now have 32% of capacity on order.
Reflagging of vessels, USTR mandate waivers
Niels Rasmussen, chief shipping analyst for BIMCO, says one potential workaround is foreign-built ships that can currently be reflagged under specific conditions.
These ships must be owned by U.S. citizens or entities and qualify for one of the following programs: the Maritime Security Program, Cable Security Fleet, Tanker Security Fleet, Voluntary Intermodal Sealift Agreement, or Ready Reserve Fleet. “The SHIPS Act would also permit the reflagging of foreign-built ships for inclusion in the new Strategic Commercial Fleet Program (SCFP) for a seven-year period, which can be extended twice,” said Rasmussen
As U.S.-built and flagged ships become available, they will replace foreign-built ships in the 250-ship SCFP fleet. However, foreign-built LNG tankers in the SCFP fleet would seemingly not satisfy USTR LNG export and would require a waiver to be able to export LNG, he said.
According to shipping consultant Clarkson’s, 2025 will see a record delivery of LNG vessels.
In addition to South Korea’s lead position in ship orders, Swiss marine engine company WinGD has the most popular engine, and French engineering company Gaztransport & Technigaz, which specializes in membrane containment systems for liquefied natural gas (LNG) and other cryogenic gases, is the dominant containment system being used in the new vessels.
The U.S. may have to fall back on a waiver provision in the USTR mandate, according to energy experts.
The waiver provision, if used, would increase the cost of vessel components by 25%, but may be the best option relative to an unreasonable delay in ship availability, said Andrew Lipow, president of Lipow Oil Associates.
Lipow said if there are not enough LNG vessels, a situation which could impact LNG production and crude production, the use of waivers would need to be considered.
“Oil wells also produce some associated natural gas with it so this can also impact U.S. oil production,” said Lipow. “The administration will not want to put the country in a situation where they would have to shut in production. If the markets are fearful that the U.S. does not have the ability to export LNG, prices could go down, and that would most likely lead to a waiver,” he added.
Lipow noted that the use of waivers has been seen before in Jones Act vessels, so a foreign-flag vessel could transport U.S. gasoline between two U.S. ports. “There is precedent for waivers on foreign-flag vessels to mitigate supply disruptions,” he said.