South Korea commits $150B to help revive US shipbuilding

South Korea has pledged $150 billion into a dedicated United States shipbuilding rejuvenation fund, as part of a much larger, $350 billion bilateral trade agreement with Washington.

According to the South Korean government, the deal will aim to breathe new life into the American vessel construction industry, in return for a lower tariff rate of 15%. Prior to this, President Donald Trump’s administration had plans to impose 25% “reciprocal” tariffs on Korean imports, starting on August 1.

The latest deal is also expected to help the East Asian nation compete in the US market with neighbouring Japan—the world’s third biggest shipbuilder—and the European Union.

As disclosed, the $150 billion investment is set to encompass the entire shipbuilding ecosystem, from construction and MRO (maintenance, repair and operation) to equipment.

More specifically, it is understood that the agreement between Seoul and Washington comprises the formation of a “Make American Shipbuilding Great Again (MASGA)” initiative, which would see the construction of new shipyards in the US, training yard workers, rebuilding supply chains, and repairing American vessels.

Commenting on this development, South Korea’s President Jae Myung Lee highlighted: “By eliminating uncertainty in the export environment and making US tariffs lower or the same as those of leading competitors that export to the US, we created conditions to compete on equal or better terms.”

“The USD 350 billion fund included in the trade agreement will firm up the basis for bilateral strategic industrial cooperation and play a role in helping Korean companies actively enter the US market in sectors Korea is strong in, such as shipbuilding, semiconductors, secondary batteries, bio and energy,” President Lee further underscored.

The agreement between the United States and South Korea comes just two months after representatives from the latter nation’s vessel construction industry held talks ‘for the first time ever’ with the United States Trade Representative (USTR) to explore opportunities for shipbuilding cooperation.

Earlier this month, the United States had struck a similar deal with Japan. As divulged by the White House, Japan has pledged a whopping $550 billion to rebuild and expand “core American industries”.

These include commercial and defense shipbuilding (spanning projects like building new yards and modernizing the existing facilities), energy infrastructure and production (liquefied natural gas, advanced fuels, and grid revitalization), as well as critical minerals mining, processing, and refining, among other commitments.

Earlier this year, President Trump declared a ‘national emergency’ and announced efforts would be made to confront what was described as a large and persistent US trade deficit, particularly in industrial and agricultural goods.

The White House emphasized that the imbalance had weakened American manufacturing and empowered non-market economies like China, which has been the United States’ top ‘opponent’, especially within the maritime transport and vessel construction sectors.

Seeking to curb China’s dominance in shipbuilding, the US unveiled specific fees for Chinese-built vessels in February 2025, which, in their initial phase, envisaged a tariff of $1.5 million per ship calling at an American port.

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The fees were then reintroduced in April this year, however, in their ‘diluted’ form, imposing a tariff that would start at $50/NT in 180 days and increase by $30/NT per year over the next three years.

Nonetheless, these fees have attracted considerable criticism from various maritime organizations, including parties from China that have described the move and the allegations behind it as ‘groundless’ and ‘threatening the stability of international trade.’

The World Shipping Council (WSC) warned in late April that the tariffs could “do more harm than good”, raising prices for consumers, destabilizing US trade and doing little to nothing to revitalize the country’s maritime industry.