China Strikes Back: Bans US-Linked Shipbuilder in Escalating Trade Tensions
In a move that’s sure to send ripples through global trade, China has banned its companies from dealing with five U.S. subsidiaries of South Korean shipbuilder Hanwha Ocean. This bold retaliation comes as Beijing pushes back against U.S. President Donald Trump’s efforts to revive America’s shipbuilding industry, a sector where China dominates globally. But here’s where it gets controversial: China’s Commerce Ministry didn’t stop there—it also launched an investigation into the U.S. probe of China’s shipbuilding dominance, labeling it a threat to national security and vowing further retaliatory measures. Is this a justified defense of China’s economic interests, or an overreach that risks destabilizing global trade?
The U.S. Trade Representative’s Section 301 investigation, initiated in April 2024, concluded that China’s stronghold in shipbuilding unfairly burdens American businesses. Kun Cao, deputy chief executive at consulting firm Reddal, summed it up bluntly: “China just weaponized shipbuilding.” He added, “Beijing is signaling it will target third-country firms that aid Washington in challenging China’s maritime dominance.” This raises a critical question: Are we witnessing the weaponization of industries in a new era of economic warfare?
The tension isn’t limited to shipbuilding. Both Washington and Beijing have imposed new port fees on each other’s vessels, effective this week, further escalating the friction. South Korea, meanwhile, has been strengthening its shipbuilding ties with the U.S. to counter China’s global dominance. In 2024, Hanwha Ocean acquired the Philly Shipyard in Pennsylvania for $100 million and pledged a $5 billion investment in new infrastructure to support U.S. shipbuilding efforts. The company also secured contracts with the U.S. Navy for maintenance and repair work, deepening its involvement in America’s maritime ambitions.
And this is the part most people miss: Hanwha Ocean’s shares plummeted by over 8% on Tuesday, closing 5.8% lower, as investors reacted to China’s sanctions. South Korea’s Foreign Ministry is scrambling to assess the impact on Hanwha and related industries, promising to minimize damage through diplomatic channels. 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 latest clash comes as the trade war between the world’s two largest economies shows no signs of cooling. Trump’s threat of a 100% tariff on Chinese imports, sparked by frustration over China’s export controls on rare earths, has unraveled any semblance of a truce. While Beijing confirmed that working-level talks were held on Monday, doubts linger about whether Trump and Chinese leader Xi Jinping will meet later this month.
China’s new port fees mirror U.S. measures, targeting ships owned or operated by U.S. entities, those with a U.S. stake of 25% or more, vessels flying the U.S. flag, and ships built in the U.S. This tit-for-tat approach underscores the deepening rift between the two powers. U.S. businesses, which own just 2.9% of the world fleet by capacity and contribute a mere 0.1% to global shipbuilding tonnage, face an uphill battle in Trump’s push to rebuild the industry.
China, meanwhile, dominates with over half of all new shipbuilding, followed by South Korea at 30% and Japan at just over 10%. Hanwha Ocean’s decision in May to withdraw from a joint venture in China now appears prescient, given the escalating tensions. As these economic giants clash, who stands to lose the most—and could this spiral into a broader global crisis? Share your thoughts in the comments below.
