Global tensions rise as China strikes back against U.S. shipbuilding ambitions, leaving South Korean giant Hanwha Ocean caught in the crossfire. In a bold move, China’s Commerce Ministry announced on Tuesday that it is banning Chinese companies from dealing with five U.S. subsidiaries of Hanwha Ocean, the South Korean shipbuilding powerhouse. This decision marks the latest escalation in the ongoing trade dispute between Beijing and Washington, fueled by U.S. President Donald Trump’s efforts to revive America’s struggling shipbuilding industry. But here’s where it gets controversial: China claims the U.S.’s investigation into its dominance in global shipbuilding poses a threat to its national security and shipping sector, sparking a heated debate over economic sovereignty versus fair trade practices.
The ministry didn’t stop there—it also threatened further retaliatory measures, citing Hanwha Ocean’s involvement in the U.S. probe. This investigation, launched by the U.S. Trade Representative under Section 301 in April 2024, concluded that China’s stronghold in shipbuilding unfairly burdens American businesses. “China just weaponized shipbuilding,” remarked Kun Cao, deputy chief executive at consulting firm Reddal. “Beijing is signaling it will target third-country firms that aid Washington in challenging its maritime dominance.” And this is the part most people miss: this isn’t just about ships—it’s a strategic battle for control over one of the world’s most critical industries.
International shipping and shipbuilding have become yet another flashpoint in the U.S.-China rivalry. Both nations have imposed new port fees on each other’s vessels, effective Tuesday, further straining relations. Meanwhile, South Korea and the U.S. have been strengthening their shipbuilding ties to counter China’s dominance as the world’s largest shipbuilder. For instance, Hanwha Ocean’s $100 million acquisition of the Philly Shipyard in Pennsylvania in late 2024 and its $5 billion investment plan in new docks underscore its commitment to supporting U.S. shipbuilding goals. The company also secured contracts with the U.S. Navy last year for maintenance and repair work on naval vessels.
However, China’s sanctions sent shockwaves through the market, with Hanwha Ocean’s shares plunging over 8% on Tuesday before closing 5.8% lower. In response, South Korea’s Foreign Ministry stated it is assessing the impact of these measures on Hanwha and related industries, pledging to minimize damages through dialogue with China. The sanctioned entities include Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC, and HS USA Holdings Corp.
This escalation comes amid a fragile truce in the U.S.-China trade war, which now appears to be unraveling. Trump’s threat of a 100% tariff on Chinese imports, coupled with China’s new export controls on rare earths, has reignited tensions. While Beijing confirmed that working-level talks were held on Monday, doubts linger over whether Trump and Chinese leader Xi Jinping will proceed with their planned meeting later this month.
China’s new port fees mirror those imposed by the U.S., targeting ships owned or operated by U.S. entities, vessels flying the U.S. flag, and those built in the United States. This tit-for-tat approach highlights the deepening rift between the world’s two largest economies. Despite these challenges, U.S. businesses hold only a 2.9% share of global fleet ownership and a mere 0.1% of global shipbuilding tonnage, underscoring the uphill battle Trump faces in revitalizing the industry. In contrast, China dominates with over half of all new shipbuilding, followed by South Korea at 30% and Japan at just over 10%.
Adding another layer of complexity, Hanwha Ocean announced in May its withdrawal from a joint venture in China, further distancing itself from the Chinese market. This move, combined with the latest sanctions, raises questions about the future of global shipbuilding alliances and the broader implications for international trade.
What do you think? Is China’s response justified, or is this a disproportionate retaliation? And could this escalating conflict reshape the global shipbuilding landscape permanently? Share your thoughts in the comments below—we want to hear from you!
