TTD to Congress: U.S. Merchant Marine Needs Tax Incentives and Government Cargo

Why It Matters

Restoring a robust U.S.-flag fleet strengthens strategic sealift capacity and reduces reliance on foreign‑controlled shipping, directly impacting national security and trade competitiveness.

Key Takeaways

• TTD urges Congress to mandate 100% government cargo on U.S.-flag vessels.
• Proposal includes 200% tax deduction for shippers using U.S.-flag ships.
• Extends Section 911 foreign‑earned‑income exclusion to U.S. merchant mariners.
• Targets competitive gap from foreign labor, tax and regulatory advantages.

Pulse Analysis

The U.S. Merchant Marine has been in steady decline for decades, eroding a critical component of national security and economic resilience. As global trade increasingly leans on foreign‑flag vessels—many owned by strategic rivals—the United States faces heightened vulnerability in both commercial supply chains and military sealift capability. The Transportation Trades Department’s policy statement underscores that without decisive government action, the U.S. will continue to cede market share to competitors that operate under cheaper labor regimes and permissive regulatory environments.

At the heart of the proposal are three legislative levers. First, a cargo‑preference rule would require 100 % of federal shipments to travel on U.S.-flag ships, creating a reliable demand signal for domestic operators. Second, a 200 % tax deduction for shippers would effectively double the expense offset for using American‑flagged vessels, narrowing the cost gap with foreign carriers. Third, extending the Section 911 foreign‑earned‑income exclusion to U.S. merchant mariners would treat their overseas wages as foreign‑earned, aligning their tax burden with that of foreign crews and improving recruitment and retention. Together, these measures aim to restore competitiveness without compromising safety or environmental standards.

If enacted, the reforms could reshape the maritime landscape by incentivizing new shipbuilding projects, expanding the domestic mariner workforce, and reinforcing the United States’ strategic sealift readiness. Policymakers will need to balance industry support with fiscal considerations, but the broader economic argument is clear: a vibrant U.S.-flag fleet safeguards supply‑chain continuity, protects critical infrastructure, and ensures that America retains the logistical muscle needed in future crises.