【By Observer News, Qi Qian】

The Trump administration has imposed arbitrary fees on ships related to China, and the Chinese side has taken countermeasures, announcing sanctions against five U.S. subsidiaries of Hanwha Ocean Co., Ltd. Upon the announcement of this news, Hanwha Ocean's stock price plummeted, causing great anxiety in South Korea.

According to Reuters and Yonhap News Agency, on October 17, the South Korean government stated that the Chinese sanctions could severely affect the supply of equipment and materials for South Korean companies, threatening the ambitious shipbuilding cooperation plan between South Korea and the United States. Previously, the South Korean government had pledged to invest 150 billion dollars to promote "Making American Shipbuilding Great Again" (MASGA), supporting President Trump's efforts to revitalize the American shipbuilding industry and surpass China.

"It will inevitably have an impact," said Seo Jong-kyun, head of the Agency for Defense Development, at a hearing in the National Assembly. The decline of the American shipbuilding industry and its supporting industries makes it impossible for South Korean companies to obtain materials and components from within the United States.

He pointed out: "I don't think we can produce all the materials and supplies for Hanwha Ocean's Philadelphia Shipyard domestically in the United States. Therefore, if you want to transport a large amount of goods from South Korea to the United States but face sanctions and various obstacles, I would say this will ultimately affect MASGA."

Seo Jong-kyun attending the hearing, Yonhap News Agency

Reuters reported that although analysts say the sanctions will not have an immediate impact, they may be a precursor to more severe actions by China and could hit South Korean shipbuilding companies collaborating with the United States.

"This is not just a trade issue, but a serious matter affecting our economic security and industrial leadership," said Yeo Yong-won, a member of the National Assembly's Defense Committee, during the hearing. He estimated that the Chinese sanctions could cause a loss of 60 million dollars for the Philadelphia Shipyard over the next two years.

He did not provide details of the estimate, but mentioned potential disruptions in supply and delays in ship deliveries in the future.

According to reports, a company document from Hanwha Ocean shows that the company has a shipyard in Shandong Province, China, mainly producing ship component modules. According to Hanwha Ocean, these modules are transported to South Korean shipyards for final assembly.

Hanwha Ocean previously told Reuters that it is closely monitoring the potential impact of this matter on its business and will continue to provide services to its customers, including investments in the U.S. maritime industry through the company and related projects at Hanwha Philadelphia Shipyard.

For a long time, the United States has been struggling with the decline of its shipbuilding industry. Currently, the U.S. accounts for less than 1% of global commercial shipbuilding, far below China's approximately 60%, with South Korea ranking second at 22%. In January 2024, Hanwha Ocean acquired the Philadelphia Shipyard for 100 million dollars. In August this year, Hanwha Ocean announced an additional investment of 5 billion dollars in the Philadelphia Shipyard.

In addition, Hanwha Ocean's competitor, the world's largest shipbuilder Hyundai Heavy Industries, is also discussing the acquisition of a U.S. shipyard with relevant companies.

Hanwha Ocean's shipyard in Philadelphia, USA, Yonhap News Agency

South Korea invested 150 billion dollars to bet on Trump's "shipbuilding dream", trying to "Make American Shipbuilding Great Again".

However, according to a report by Bloomberg in August, Nomi Securities, a Japanese financial institution, analyzed that South Korea's ambition to use its shipbuilding companies to revive the struggling American shipbuilding industry may threaten the profitability of its own shipyards.

At the same time, some observers in South Korea have called on the government to proceed with caution. Some scholars described the South Korean shipbuilding industry as being in a crisis for the past decade and now, after just leaving the intensive care unit (ICU), it has been given a heavy responsibility. Data shows that in 2024, the number of ships delivered by South Korea was far behind China, with South Korea accounting for about 17% and China around 68%.

Additionally, some analysts pointed out that the Trump administration has a more pessimistic view of its partners and allies, making it difficult to believe that long-term cooperation between the U.S. and South Korea will be achieved. "If this deal cannot last for ten years, it has no economic significance."

On October 14, Eastern Time, the U.S. officially implemented restrictions such as port fees on the maritime, logistics, and shipbuilding sectors of China based on the so-called Section 301 investigation. On the same day, the Chinese Ministry of Commerce expressed strong dissatisfaction and firmly opposed it, and had already announced on October 10 that it would impose special port fees on ships involving U.S. flags, U.S.-built, or U.S. companies owning, participating in, or operating them.

On the same day, China further escalated its measures, announcing countermeasures against five U.S. subsidiaries of Hanwha Ocean Co., Ltd., prohibiting organizations and individuals within China from conducting any transactions or collaborations with them.

On the 15th, at the regular press conference of the Foreign Ministry, a foreign reporter asked, "South Korea said it is negotiating with China to minimize the impact of China's measures on South Korean shipbuilders, marine companies, and subsidiaries connected to the United States. What is China's response? Additionally, South Korean media reported that South Korea said such sanctions may be related to the tension between China and the U.S. What is China's comment on this?"

Foreign Ministry Spokesperson Lin Jian responded that the relevant authorities of China had already made a statement on the issue yesterday, and you can check it. We once again urge the U.S. side and relevant enterprises to respect the facts and multilateral trade rules, abide by the principles of market economy and fair competition, and correct the erroneous practices as soon as possible, stopping the damage to China's interests.

This article is an exclusive contribution from Observer News, and without permission, it cannot be reprinted.

Original: https://www.toutiao.com/article/7562365133708739124/

Statement: This article represents the views of the author and welcomes your opinion by clicking on the [Like/Dislike] buttons below.