China sanctions 5 US units of South Korean shipbuilder over probe by Washington

An aerial view of a container port is seen in Qingdao in Shandong province, June 2024

China’s Commerce Ministry said yesterday it was banning dealings by Chinese companies with five subsidiaries of South Korean shipbuilder Hanwha Ocean in the latest swipe by Beijing at U.S. President Donald Trump’s effort to rebuild the industry in America.

The ministry also announced that it was investigating a probe by Washington into China’s growing dominance in world shipbuilding, and threatened more retaliatory measures. It said the U.S. probe endangers China’s national security and its shipping industry and cited Hanwha’s involvement in the investigation.

The U.S. Trade Representative launched the Section 301 trade investigation in April 2024. It determined that China’s strength in the industry was a burden to U.S. businesses.

“China just weaponized shipbuilding,” said Kun Cao, deputy chief executive at consulting firm Reddal. “Beijing is signaling it will hit third-country firms that help Washington counter China’s maritime dominance.”

International shipping and shipbuilding have yet another areas of friction between Washington and Beijing. Each side has imposed new port fees on each others’ vessels that took effect on yesterday.

South Korea and the U.S. have been building closer ties in shipbuilding in response to China’s dominance as the world’s largest shipbuilder.

In late 2024, Hanwha Ocean acquired the Philly Shipyard in Pennsylvania for $100 million. It announced in August that it plans to invest $5 billion in new docks and quays as part of its support for U.S. efforts to restore globally competitive shipbuilding capacity.

Last year, Hanwha Ocean secured contracts with the U.S. Navy to perform maintenance, repair and overhaul work for U.S. naval vessels.

The company said via email that “Hanwha Ocean is aware of the announcement made by the Chinese government and is closely reviewing its potential business impact on the company.”

Hanwha Ocean’s shares traded in South Korea fell as much as over 8% yesterday, closing 5.8% lower.

In a statement to The Associated Press, South Korea’s Foreign Ministry said the Seoul government was assessing how the sanctions might affect the Hanwha companies and related South Korean industrial sectors.

The ministry said it will “communicate with relevant ministries, industry representatives and the Chinese side to minimize damages resulting from these measures.”

The sanctioned entities are Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC and HS USA Holdings Corp.

A truce in the trade war between the world’s two biggest economies appears to have unraveled after U.S. President Donald Trump threatened a new 100% tariff on imports from China, expressing frustration over new Chinese export controls on rare earths.

The escalation of antagonisms raised doubts over whether Trump and Chinese leader Xi Jinping will go ahead with a meeting planned for late this month. But Beijing said yesterday that China and the U.S. held working-level talks and have maintained communication.

China said its new port fees would apply to ships owned by U.S. companies or other entities or individuals, those operated by U.S. entities including those having a U.S. stake of 25% or more, vessels flying a U.S. flag and vessels built in the United States, mirroring in many aspects the U.S.’s port fees on Chinese ships.

U.S. businesses represents just 2.9% of world fleet ownership by capacity and 0.1% of global shipbuilding tonnage. Trump has vowed to help rebuild the industry as part of his broader push to expand U.S.-based manufacturing.

China accounts for more than half of all new shipbuilding, with South Korea at about 30% and Japan just over a tenth of the total.

Hanwha Ocean said in May that it was withdrawing from a joint venture in China. CHAN HO-HIM, HONG KONG, MDT/AP