Korea holds shipbuilding as U.S. bargaining chip, but the legal waters are murky
Published: 25 Jul. 2025, 09:44
Updated: 27 Jul. 2025, 19:29
Audio report: written by reporters, read by AI
![The image shows a render of HD Hyundai Mipo’s liquefied carbon dioxide carrier. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2025/07/27/98ddea85-e570-45d5-83e2-7a7a3c1238d3.jpg)
The image shows a render of HD Hyundai Mipo’s liquefied carbon dioxide carrier. [YONHAP]
Korea is positioning its shipbuilding industry as a key bargaining chip in tariff talks with the United States, with industry experts stressing that its technological edge can offer greater value than capital investment alone.
Japan, which concluded its own talks on Wednesday, pledged over $550 billion in U.S. investment — a benchmark of what Korea could expect.
Since U.S. President Donald Trump took office again in January, Korean firms have deepened ties with U.S. shipyards.
HD Hyundai recently formalized a deal with Edison Chouest Offshore (ECO) to co-build medium‑sized liquefied natural gas (LNG) dual‑fuel container ships in the United States.
An ECO delegation toured HD Hyundai facilities in Korea on Tuesday and Wednesday to map out cooperation plans.
HD Hyundai also signed a memorandum of understanding in April with Huntington Ingalls Industries — the largest U.S. defense shipbuilder — to improve production efficiency and share advanced shipbuilding techniques.
That move positions HD Hyundai to participate in future U.S. Navy vessel production.
Hanwha Ocean also placed a recent order for an LNG carrier through its shipping affiliate to strengthen the shipbuilding capacity of Philadelphia Shipyard, a U.S. yard the company acquired in December last year.
Hanwha Philly Shipyard signed a construction contract worth 348 billion won ($254 million) with Hanwha Shipping, which marked the first time a U.S. shipyard had received an order for an LNG carrier for the first time in 46 years.
Starting in the 1980s, U.S. shipbuilders shifted to military vessel production and lost their foothold in the LNG carrier market, which requires advanced technologies such as cargo containment and piping systems.
But challenges remain over whether the vessel will legally qualify as U.S.-built.
The actual shipbuilding will take place at Hanwha Ocean’s Okpo shipyard in Geoje, South Gyeongsang, due to a shortage of skilled labor and technical capacity at the U.S. site.
For now, Hanwha Philly Shipyard will manage the administrative procedures for the project.
“We want the Philly yard, which lacks experience with high-value vessels like LNG carriers, to gain expertise through this project and eventually build independently," a Hanwha Philly Shipyard representative said.
Still, a key question remains: Will the U.S. government recognize the ship as domestically produced?
![The Kool Tiger LNG Tanker is docked at the Freeport LNG facility in Quintana, Texas, on June 23. [REUTERS/YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2025/07/27/22596c94-e536-4d3e-9ab3-4e59046a5975.jpg)
The Kool Tiger LNG Tanker is docked at the Freeport LNG facility in Quintana, Texas, on June 23. [REUTERS/YONHAP]
Under current law, a ship must use no more than 25 percent foreign components by value and have its structure completed through welding and assembly in the United States to earn “U.S.-built” status.
If Washington strictly enforces this requirement, Korean firms like Hanwha may need to invest heavily in U.S. facilities and labor to stay compliant.
“Just like Hyundai Motor Group committed 31 trillion won in U.S. investments, the shipbuilding industry expects similar pressure to pledge several trillion or even tens of trillions of won," an executive at a Korean shipbuilder, speaking on condition of anonymity, said.
Yang Jong-seo, a researcher at the Overseas Economic Research Institute, urged caution.
“Even if they invest, securing productivity will be difficult in the United States given the shortage of skilled labor,” Yang said. “This is something the government needs to resolve during negotiations.”
If the two countries agree to recognize a co-construction model, Korean firms could reduce costs while retaining key production roles.
Such a framework would allow Korea to assist in revitalizing U.S. shipbuilding while also capturing surging demand for LNG carriers.
Starting in 2029, U.S. federal law will require that domestically produced LNG be exported on U.S.-flagged vessels, driving up demand.
"Both U.S. Democrats and Republicans view shipbuilding as vital to national security," said Chae Woo-seok, executive director of the Korea Defense Industry Association. “With the shipbuilding card in hand, the Korean government does not need to yield in negotiations with the United States."
Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK YOUNG-WOO [[email protected]]
with the Korea JoongAng Daily
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