“It would seem to me that shipping munitions in a passenger vessel would have been an act of gross negligence and/or provocation on the part of the U.S., and that Germany wouldn’t bear much responsibility at all for the sinking of that ship if it were a legitimate target.”
The Lusitania was a British vessel owned by the Cunard Line, not a U.S. property.
Not that it's relevant in this case, but under U.S. railroad regulations the shipper bears nearly all the responsibility for what they are shipping when it comes to safety, regulatory requirements, etc. -- not the carrier.