By Andrea Shalal and David Lawder

WASHINGTON (Reuters) - The U.S. Trade Representative's office on Thursday said it has found China's targeted dominance of the global shipbuilding, maritime and logistics sectors is "unreasonable" and is "actionable" under U.S. trade law.

The findings of a USTR probe, first reported by Reuters on Tuesday, did not include a specific recommendation of penalties against Beijing, leaving next steps up to President-elect Donald Trump, who takes office on Monday.

USTR said its report "supports a determination that China's targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable and burdens or restricts U.S. commerce and thus is actionable."

China's embassy in Washington could not immediately be reached for comment on the probe.

U.S. Trade Representative Katherine Tai launched the probe in April 2024 at the request of the United Steelworkers and four other U.S. unions under Section 301 of the Trade Act of 1974, which allows the U.S. to penalize foreign countries that engage in acts that are "unjustifiable" or "unreasonable," or burden U.S. commerce.

Section 301 is the law used by both Trump and President Joe Biden to impose steep tariffs on Chinese imports since 2018.

Tai said in a statement that the U.S. commercial shipbuilding sector has fallen to less than five ships a year from 70 in 1975, while China now builds 1,700 ships annually.

"Beijing's targeted dominance of these sectors undermines fair, market-oriented competition, increases economic security risks, and is the greatest barrier to revitalization of U.S. industries, as well as the communities that rely on them," Tai said.

"These findings under Section 301 set the stage for urgent action to invest in America and strengthen our supply chains," she said.

The report found that China's effort to dominate the shipbuilding, maritime and logistics sectors is due to Beijing's "extraordinary control" over enterprises in the sector and deprives market-oriented firms of commercial opportunities. This in turn reduces competition and increases dependence on China.

The Chinese sectors benefit from China's lack of effective labor rights, excess capacity in steel production and control over digital logistics services, the report found.

U.S. Senator Mark Kelly, said the report illustrated the need to revitalize U.S. shipbuilding and maritime industries, including through his legislation to achieve that.

"The PRC's unfair trade practices are enabling China's dominance over the oceans, while hurting American workers and our national security," Kelly said, using an acronym for the People's Republic of China.