Proposed US vessel cargo mandate in FY 2027 NDAA may affect retailers and importers

A United States cargo mandate provision currently moving through Congress could hold companies responsible for ensuring that a specified percentage of their imported cargo arrives at US ports on designated US-flag ships. The House of Representatives passed the provision on July 22, 2026, which appears in the statutory text of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2027. If enacted, failure to satisfy the new mandate would result in financial penalties. This would be the first federal mandate to apply US-flag requirements for imported commercial cargo.

The provision was included as part of an en bloc amendment. The provision has drawn limited public commentary to date, though many retailers and e-commerce businesses would likely be “covered shippers” under it. The Senate Committee on Armed Services will begin marking up the bill when it returns from its summer recess on September 14, 2026. The forthcoming action to progress this legislation provides significant opportunity for stakeholders to constructively engage in affecting the substance and outcome of both the bill’s substance as well as the subsequent rulemaking.

We provide key considerations for retailers and importers below.

Overview of the mandate: Covered shippers, covered cargo, and qualifying US vessels

The provision requires covered shippers operating in designated trade lanes to ensure that a certain percentage of imported “covered cargo” arrives in US ports on “qualifying US vessels.” Covered shippers are beneficial cargo owners, importers of record, and certain third-party logistics service providers. This definition includes various retailers and e-commerce businesses, as these companies commonly take cargo at foreign ports on a free-on-board basis. Covered cargo is defined as containerized cargo and roll-on/roll-off vehicles.

Qualifying US vessels are those that operate under a US flag and meet the other requirements discussed below. The applicable percentage, referred to as “participation targets,” would start at no less than 3 percent per year for each covered shipper affiliated group and would escalate in successive phases in later years.

The mandate would be enforced by an annual certification process, under which covered shippers must certify whether they met their participation targets for the compliance year. A covered shipper that fails to certify that it met a participation target for a compliance year would be subject to a civil penalty of no less than ten percent of the value of the covered shipper’s imported cargo for the compliance year.

The penalty would be calculated on the value of imported cargo, excluding cargo that arrived on qualifying US vessels. Repeated failures to meet participation targets would result in increasing penalties. Separate penalties would apply for failing to file annual certifications, filing false or misleading documents, and other failures to comply with the mandate. Covered shippers meeting annual participation targets would need to develop new procurement procedures to help ensure that, for each compliance year, ship operators deliver sufficient cargo on qualifying US vessels.

Impacts on other stakeholders: Ship owners and ship operators

Ship owners

To continue serving the US import market, ship owners would need to begin supplying qualifying US vessels to ship operators. A qualifying US vessel is a vessel operating under a US flag that was built in an “allied country” with an increasing percentage of US materials and US labor. An allied country is any country designated as such by the Secretary of Defense, in consultation with the Secretary of Transportation and the Secretary of State.

Vessels that are owned, chartered, managed, or operated by or on behalf of an entity subject to foreign ownership, control, or influence would be required to comply with certain national security requirements, including executing a “Maritime Special Security Agreement” with the Department of Transportation. These agreements would require corporate governance provisions applicable to the ship-owning entity.

Vessels that are directly or indirectly controlled by citizens of the People’s Republic of China, North Korea, Iran, the Russian Federation, or any other designated “country of concern” would be ineligible to become qualifying US vessels. The bill does not expressly address the status of Hong Kong.

Ship owners that time charter vessels to ship operators would be required to supply a US crew in accordance with US crewing requirements applicable to US-flag vessels.

Ship operators

Ship operators would need to institute procedures to ensure that ship owners can supply sufficient qualifying US vessels to meet their contractual obligations with covered shippers, subject to the cargo mandate. Ship operators that bareboat charter vessels would be required to supply a US crew in accordance with US crewing requirements applicable to US-flag vessels.

Status of the cargo mandate and other shipping provisions

The US cargo mandate and several other shipping-related provisions were included in the NDAA that was passed and sent to the Senate in July 2026. If Congress convenes a conference committee, the existing shipping provisions could be retained unchanged, amended, or removed from the bill for future consideration.

The shipping provisions in the NDAA are part of a larger policy plan addressing the US shipping industry. Beginning in 2024, a bipartisan group of House and Senate members raised concerns about the decline in the US shipping industry. The group drafted two comprehensive bills to begin developing a legislative plan, including the Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act of 2024 and the SHIPS for America Act of 2025.

On April 9, 2025, President Donald Trump issued Executive Order (EO) 14269, “Restoring America’s Maritime Dominance,” which directed the Administration to develop a Maritime Action Plan (MAP) and propose legislation that would facilitate the policy goals identified in the EO. The US cargo mandate appears to follow from the MAP and the related legislative directives discussed in the EO.

The EO also contemplates additional proposals addressing shippers, shipbuilders, ship operators, ship owners, merchant marines, harbors and ports, and related industries that contribute to the US shipping supply chain. Potential measures include general industry reforms, tax incentives, funding mechanisms, and the creation of special offices within government bureaus intended to focus on the US shipping industry.

The Trump Administration has indicated it may act under existing authorities and transmit additional legislative proposals to Congress for matters that require a change in law. Timing for further legislative action has not been announced.

Learn more

DLA Piper is monitoring the proposals and is available for consultation. For questions or more information, please contact the author.