- South Korea Warns of Supply Disruptions to U.S. Shipyards.
- Officials Say Sanctions Could Undermine MASGA Initiative.
- Hanwha’s China Operations Face Scrutiny Under New Restrictions.
China’s recent sanctions on U.S.-linked units of shipbuilder Hanwha Ocean are stirring up worries in Seoul about the potential impact on the ambitious shipbuilding partnership between South Korea and the United States. Officials have cautioned that these sanctions could disrupt the supply of essential Chinese-made equipment and materials needed for ongoing projects, reports Reuters.
Trade Tensions Heat Up Before Leaders’ Meeting
On Tuesday, Beijing announced the sanctions just as the U.S. and China began imposing new port fees on each other’s vessels, escalating their long-standing trade conflict right before a scheduled meeting between the leaders of both nations. South Korea has committed $150 billion to the initiative “Make America Shipbuilding Great Again,” which aligns with U.S. President Donald Trump’s efforts to rejuvenate America’s shipbuilding sector and close the gap with China.
Seoul Officials Warn of Supply Chain Strain
The decline of U.S. shipbuilding and related industries has made domestic sourcing nearly impossible, officials in Seoul said. “There is bound to be an impact,” South Korea’s Minister of Defence Procurement Program Administration Seok Jong-gun stated. “I don’t see how we can make all the materials and supplies for Philly Shipyard within the U.S.,” Seok said during a parliamentary hearing. “So if you’re going to get a lot of things to the U.S. from South Korea, and you have sanctions and all kinds of obstacles to doing that, I’d say there’s going to be an impact on MASGA eventually.”
Hanwha’s Connection to China and Potential Consequences
Hanwha runs a shipyard in China’s Shandong province that constructs ship modules, which are then sent to South Korea for final assembly, according to company filings. While analysts believe the immediate effects of the sanctions might be minimal, they warn that this could be a precursor to stricter measures from China, potentially impacting other South Korean companies collaborating with the U.S.
Economic and Security Concerns
South Korean lawmaker Yu Yong-weon estimated that the sanctions could cost Philly Shipyard $60 million over the next two years due to supply disruptions and vessel delays.
“This is not simply a trade issue but a grave matter that affects our economic security and industrial supremacy,” Yu said, noting his recent visit to the shipyard.
Hanwha Ocean declined to comment on the projected losses, but Hanwha USA said in a statement: “Hanwha will continue to provide world-class maritime services to our customers, including through our investments in the U.S. maritime industry and via Hanwha Philly Shipyard.”
Response from U.S. and South Korean Industries
Philly Shipyard, one of the five Hanwha subsidiaries affected by the sanctions, was acquired by the company last year. Meanwhile, South Korean competitors HD Hyundai and Samsung Heavy Industries are looking into similar opportunities for maritime cooperation with the U.S., including the construction of navy vessels.
Earlier on Friday, the U.S. State Department denounced China’s move as “an irresponsible act that interferes with a private company’s operations and undermines South Korea-U.S. cooperation on revitalising U.S. shipbuilding and manufacturing.” “China’s actions … are the latest example in a long pattern of China’s attempts to coerce (South) Korea,” a spokesperson said.
Security Rationale Behind Beijing’s Move
China’s Commerce Ministry said the sanctions were imposed due to “security risks” linked to Hanwha Ocean’s U.S.-connected units, accusing them of involvement in “relevant investigative activities” by the U.S. government.
Wider Trade Implications
South Korea’s $150 billion investment plan is a crucial part of a larger trade agreement aimed at reducing U.S. tariffs on South Korean products; however, Beijing’s latest actions now pose a threat to that vision.
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Source: Reuters
