South Korean Shipbuilders First to Benefit from Trump’s Plan to Keep US Navy Afloat

The White House memo allowing foreign shipbuilders with US investments to construct vessels for the American Navy has sent shockwaves through the defense industry. The implications are far-reaching and complex, but one thing is clear: South Korean shipbuilders, particularly Hanwha Ocean, are poised to reap the rewards of this policy shift.

The Indo-Pacific region has been a hotbed of strategic competition between the US and China for years. Washington’s decision to strengthen its naval position in the area comes as no surprise, given growing concerns about America’s dwindling shipbuilding capacity. The US Navy currently operates at a fraction of its optimal size, with some officials warning that it may not be able to meet strategic demands if the trend continues.

Hanwha Ocean’s acquisition of Philly Shipyard in 2024 has put them squarely in line with the memo’s guidelines, making them the first – and so far, the only – foreign company to benefit from Trump’s plan. The requirement for foreign companies to either build a new US shipyard or acquire a controlling stake in an existing one is designed to address this capacity issue.

The reliance on foreign companies to build US Navy vessels raises questions about national security and industrial policy. American taxpayers may expect their tax dollars to support domestic industries rather than foreign ones, and ceding control over critical infrastructure like shipbuilding to foreign entities could have long-term implications for dependency and vulnerability.

Hanwha Ocean’s decision to study the memo before commenting on it highlights the complexity of this issue. On one hand, increased investment and partnerships with US companies can lead to new technologies and efficiencies. On the other, allowing foreign entities to dominate strategic industries raises concerns about national security.

The current state of shipbuilding capacity in the US is a stark reminder of the consequences of neglecting domestic industry. The collapse of several major shipyards over the past few decades has left the country with limited options for upgrading its naval capabilities. Trump’s plan may offer a temporary fix, but it also highlights the need for a more comprehensive and sustained approach to strengthening America’s industrial base.

As the US Navy continues to rely on foreign companies to build its vessels, questions arise about the long-term health of American shipbuilding capacity. Will domestic industry be able to compete with foreign entities, or will it continue to suffer from neglect? The stakes are high, and the outcome far from certain.