Author: Maria Pechurina, Director of International Trade
Why Seoul Is Betting $350 Billion on U.S. Shipyards
Earlier this year, South Korea pledged a $350 billion investment package, with roughly $150 billion specifically allocated toward shipbuilding collaboration. $5 billion is coming from Hanwha Ocean, one of the “big three” shipbuilders in South Korea, signaling a forming shipbuilding alliance. Pledging capital to secure better trade terms, which used to be unthinkable, is now standard practice in an era shaped by the industrial diplomacy of the Trump administration. These geopolitical hedges need not be confused with gestures of goodwill. Paired with U.S. port fees (currently suspended for China) and maritime penalties aimed at foreign-built vessels, the pledge is designed to bring real industrial activity like design, repairs, and high-value components back into American yards and dilute Beijing’s shipbuilding dominance. South Korea’s shipbuilding share has been declining almost perfectly in tandem with China’s rise. If Washington rebuilds capacity, Seoul gains a credible ally, diversified demand, and a leverage against Beijing; if America does nothing, China will likely continue on this trajectory. Therefore, investing in U.S. yards is not charity; it is a survival strategy.
The Strategic Problem
In the last 25 years, China has steadily taken over the shipbuilding industry. With the help of subsidies, cheap financing, vertically coordinated yards, and captive demand from state carriers, Beijing has built an industrial model where scale turned into considerable leverage. Between 2006 and 2013 alone, Chinese subsidies reached $91 billion. This has also contributed to the South China Sea’s transformation from a regional maritime zone into the planet’s most militarized shipping artery and a chokepoint for trillions in annual trade.
Chinese shipyards sit atop a supply chain China owns nearly end-to-end:
• ~95% of the world’s shipping containers
• ~70% of port cranes
• ~100 major port stakes through state-controlled firms
China’s logistics monopoly has created a dominant market position and a comprehensive surveillance platform, while the U.S., a country whose military mobilization still moves ~90% of cargo by sea, has almost no commercial shipbuilding base to speak of. Navy yards are overloaded, flagship programs bleed money and fall behind schedule, and commercial work barely exists. Meanwhile, China churns out tonnage faster, cheaper, and with guaranteed financing. Suspending the $50 per net ton maritime fee on Chinese-linked vessels as part of the “trade truce” is practically lending a hand to the strategic adversary of the United States.
The Dire Economic Reality: A Shrinking Shipping Market
This is happening during a contraction of global shipping as container trade is declining or coming up flat. Ports refer openly to a “goods recession,” driven by demand softness, tariff noise, and detours around conflict zones like the Red Sea. Older ships are being recycled; new builds are declining. Japanese yards are burning capital just to keep their pipelines alive and reclaim market share from Korea, which may cause issues in the alliance and trade flows down the line. In stagnant markets, whoever controls subsidized industrial capacity can wait everyone else out, and currently, that player is China.
Why South Korea Is Paying the U.S.
China’s competitiveness has turned into industrial displacement over the last few decades: China delivered 5% of world tonnage in 1999, 36% by 2015, and 53% by 2024. Korea’s giants like Hyundai Heavy, Samsung Heavy, and Hanwha Ocean are being outbid by Chinese SOEs armed with financing packages, accelerated approval pathways, and subsidized green-fuel vessel lines. The United States, by comparison, delivered five commercial ships in 2022, only 0.2% of global output. Equity stakes in dozens of ports aren’t mere “infrastructure investment” – this is China’s methodical pursuit of securing chokepoints. As intelligence firms warn, China can potentially use these nodes for espionage, coercion, or supply-chain disruption during conflict. At this time, the U.S. industrial base cannot support maritime war needs, which is precisely why the original port fee structure mattered. The $50 per net ton penalty (rising to $140 by 2028) was one of the only tools that could neutralize the impact of Chinese subsidies and simultaneously fund U.S. capacity; halting this measure signaled weakness. Seoul understands this; by pushing capital directly into U.S. yards, propulsion supply chains, and allied industrial projects, Korea is building an alternative center of gravity outside of Beijing’s orbit. But keep in mind the interim nature of this arrangement – if the U.S. actually regains capacity and market share, Korean and Japanese firms will retreat to defend their own margins. Industrial alliances fade in the face of strategic necessity. Which poses a fundamental question: What does “great again” actually mean? Is it nostalgia or a demand for sovereign industrial capability?
The Closing Reality
The window of opportunity is open right now for a few reasons: global goods movement is weak, buyers and producers are reluctant to commit, and allies are terrified of China’s industrial ceiling. That will not last.
If Washington takes advantage of Korean capital, an alliance framework, and port-fee systems that favor allied-built tonnage, then MASGA becomes more than a slogan, allowing the US to gain industrial sovereignty in maritime logistics, the one sector that underwrites every other. If it hesitates, the U.S. will not simply outsource jobs, it will outsource leverage to the same shipyards already dominating the world’s oceans.