By Andrea Shalal, Jonathan Saul and Lisa Baertlein

WASHINGTON (Reuters) -U.S. President Donald Trump signed an executive order on Wednesday aimed at reviving U.S. shipbuilding and reducing China's grip on the global shipping industry, vowing to boost funding for the effort in coming years.

Republican and Democratic U.S. lawmakers for years have warned about China's growing dominance on the seas and diminishing U.S. naval readiness.

Senators Mark Kelly, a Democrat, and Todd Young, a Republican, welcomed the executive order and said they would reintroduce their bipartisan legislation to provide the congressional authorizations needed to revitalize the industry.

The order directs the U.S. Trade Representative to move ahead with a proposal that included levying million-dollar U.S. port docking fees on any ship that is part of a fleet that includes Chinese-built or Chinese-flagged vessels. Allies will be pushed to act similarly.

USTR's recommended port fees had sparked sharp criticism from commodities exporters, trade groups and U.S. ship operators, who warned of supply chain disruptions, job losses in port cities and inflation. The order must be finalized by an April 17 deadline.

U.S. Trade Representative Jamieson Greer on Wednesday said USTR should have a final decision on remedies by middle of the month and repeated his comments from Tuesday, saying that not all of the measures outlined by the agency's original proposal would be implemented.

"This could have been a miscommunication issue, some people thought that all of those measures would be imposed," Greer said. But after feedback and public comments, "now we consider which of those measures is most appropriate."

The order also requires USTR to consider proposing tariffs on ship-to-shore cranes manufactured, assembled, or made using components of Chinese origin, or manufactured anywhere in the world by a company owned, controlled, or substantially influenced by a Chinese citizen, as well as tariffs on other cargo handling equipment.

The executive order further requires the Department of Homeland Security to enforce collection of Harbor Maintenance Fees and other charges, and to prevent cargo carriers from circumventing those fees by routing goods to ports in Mexico and Canada and then sending cargo into the United States via land borders.

Trump, speaking in the Oval Office, said the United States would be spending "a lot of money on shipbuilding" to restore American capacity in the sector.

"We're way, way, way behind," he told reporters. "We used to build a ship a day, and now we don't do a ship a year, practically, and we have the capacity to do it."

The order said recent data showed the United States built less than 1% of commercial ships globally, while China built about half, an increase from just 5% in 1999, according to the Center for Strategic and International Studies.

Trump's order called for creation of a Maritime Security Trust Fund to provide reliable funding for programs aimed at shoring up U.S. maritime capacity, including consideration of potential new or existing tariff revenue, fines, fees, or tax revenue.

It also calls for incentives to encourage private investment in construction of commercial components, and improvements to shipyards, repair facilities and dry docks.

The U.S. shipbuilding industry, which peaked in the 1970s, has struggled due to high costs and a complex regulatory structure, which has enabled rivals including China to grow rapidly.

(Reporting by Andrea Shalal in Washington, Jonathan Saul in London, Lisa Baertlein in Los Angeles; additional reporting by Gram Slattery and David Lawder; Editing by Chizu Nomiyama, Sandra Maler and Lincoln Feast.)