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Investing.com -- Shares of Huntington Ingalls Industries (NYSE:HII) climbed 13% following President Donald Trump’s address to Capitol Hill, where he announced initiatives aimed at revitalizing the U.S. shipbuilding industry to counter China’s dominance.
In his speech, Trump revealed plans to establish a new office of shipbuilding within the White House and to introduce special tax incentives to encourage the shipbuilding industry’s return to the U.S. "We used to make so many ships, we don’t make them anymore very much," Trump stated, emphasizing the need to revive a sector that has seen significant decline while China’s shipbuilding capacity has surged.
China currently leads the global shipbuilding market, producing over half of the world’s merchant vessels. In contrast, the U.S. shipbuilding industry has been waning. The Trump administration’s proposed measures to bolster American shipbuilding include imposing fees on Chinese-built ships and cranes entering U.S. ports, as reported by The Wall Street Journal.
Despite the positive market reaction to Trump’s announcement, industry experts have expressed doubts about the feasibility of rapidly rejuvenating the U.S. shipbuilding industry, considering the high costs of labor and raw materials. China’s shipbuilding industry has outpaced competitors from Japan and South Korea, gaining a competitive edge in pricing and expertise.
Additionally, Trump mentioned plans to "reclaim" the Panama Canal by supporting a BlackRock-led consortium’s acquisition of key ports near the strategic maritime passage from a Hong Kong-based conglomerate.
The president’s address has clearly resonated with investors, as evidenced by the significant uptick in HII’s stock price, signaling market confidence in the potential benefits of these governmental initiatives for the shipbuilding sector. However, the long-term impact of these measures on Huntington Ingalls Industries and the broader industry remains to be seen, as the U.S. endeavors to navigate the complexities of reestablishing its shipbuilding prowess.
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