America’s New Maritime Strategy to Grow the U.S. Flag Fleet
At last week’s International Maritime Organization (IMO) meetings, the world moved one step closer to implementing the first global carbon levy on shipping. Starting in 2028, vessels will be taxed as much $380 per metric ton of CO₂ for emissions above a formulaic threshold. For a benchmark medium range (MR) product tanker—one of the workhorses of the global fleet—the annual cost could climb from $575,000 in 2028 to over $3.2 million by 2035 without investment in emissions-reduction technology.
The American delegation skipped IMO entirely and shared an official statement: "The U.S. rejects any and all efforts to impose economic measures against its ships based on [greenhouse gas] emissions or fuel choice"—making clear that U.S.-flagged vessels would be exempt from the levy. Although some media headlines framed the U.S.’s absence as disengagement, taken in context, it increasingly looks like a deliberate strategy to grow the U.S. flag fleet by combining international exemptions with domestic incentives.
While the IMO debated carbon pricing in London, President Trump signed an Executive Order on Restoring America’s Maritime Dominance, which calls for:
“...incentives that will (i) grow the fleet of United States built, crewed, and flagged vessels... and (ii) increase the participation of United States commercial vessels in international trade.”
The order mandates new legislative proposals to expand support for U.S.-flag shipping—including enhanced subsidies for construction and modification of militarily useful vessels. Pair that with carbon levy immunity, and what emerges is the outline of a new American maritime industrial strategy.
Much like the Jones Act protects U.S.-flagged ships in domestic trade, the next chapter may shield them from international costs. Under the new order, the U.S. flag becomes a commercially viable option in global markets, despite the higher cost to employ U.S. seafarers, particularly for ships that can serve dual military-commercial purposes.
Consider the math: the Tanker Security Program (TSP), which specifically supports U.S. flag MR product tankers, already offers an annual $6 million stipend per vessel in exchange for their availability during national emergencies. When paired with up to $3 million in avoided carbon taxes by 2035, the cumulative support could exceed $9 million per ship per year—an amount that could move the dial figure for owners of vessels considering reflagging.
The new executive order won’t lure in the latest LNG dual-fuel VLCCs or methanol-ready newbuilds. But it may provide a soft landing for less efficient ships that still hold strategic or commercial value.
If the IMO follows through on its levy, and if the U.S. holds its exemption, reflagging to the U.S. becomes more than a regulatory workaround: it becomes a carbon compliance strategy with built-in cash flow.
Every policy choice sends a signal to the market. By exempting U.S.-flagged ships from carbon levies and bolstering domestic subsidies, Washington is sending a clear one: the U.S. fleet is open for business again. It won’t be a flood, but for shipowners caught between decarbonization mandates and capital constraints, the message may be enough.
