China has thrown down the gauntlet in the escalating global shipbuilding standoff, sanctioning five U.S.-based subsidiaries of South Korean shipbuilding giant Hanwha Ocean. This move, announced on October 14, 2025, by Beijing’s Ministry of Commerce, marks a bold retaliation against what it calls “unjustified” U.S. investigations into Hanwha’s dealings and, more broadly, Washington’s efforts to curb China’s maritime dominance. The sanctions ban the targeted subsidiaries from any trade or investment activities with Chinese firms or individuals and freeze their assets under China’s jurisdiction—a stark warning shot in the ongoing trade and tech rivalry between the world’s two largest economies.
The sanctioned entities—Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC, and HS USA Holdings Corp.—are major cogs in Hanwha Ocean’s U.S. operations. The action comes on the heels of a U.S. Trade Representative’s Section 301 investigation launched in April 2024, which concluded that China’s dominance in shipbuilding posed a significant burden to American businesses. According to AP, the U.S. probe zeroed in on alleged violations of export control laws, particularly concerning dual-use technologies that can serve both civilian and military purposes.
Hanwha Ocean, formerly known as Daewoo Shipbuilding & Marine Engineering (DSME), is a heavyweight in the global defense and shipbuilding sector. The company has deep ties with both the South Korean military and international defense clients, and has recently expanded its footprint in the United States. In late 2024, Hanwha Ocean acquired the Philly Shipyard in Pennsylvania for $100 million, and in August 2025, it pledged a massive $5 billion investment in new docks and quays to support the U.S.’s push to rebuild its shipbuilding industry. The company also secured contracts last year to perform maintenance and overhaul work for U.S. naval vessels.
Not surprisingly, the sanctions sent shockwaves through markets. Hanwha Ocean’s shares in South Korea tumbled over 8% on the day of the announcement, eventually closing 5.8% lower, as reported by AP. The company, in a statement, said, “Hanwha Ocean is aware of the announcement made by the Chinese government and is closely reviewing its potential business impact on the company.” South Korea’s Ministry of Foreign Affairs echoed this cautious approach, stating that it was “assessing how the sanctions might affect the Hanwha companies and related South Korean industrial sectors” and would “communicate with relevant ministries, industry representatives and the Chinese side to minimize damages resulting from these measures.”
Beijing’s rationale for the sanctions was clear: it accused Hanwha’s U.S. subsidiaries of assisting and supporting U.S. government investigations in ways that “harmed China’s sovereignty, security, and development interests,” according to Caixin. The Ministry of Commerce described the U.S. investigation as “politically motivated,” further accusing Washington of “habitual abuse of export controls to suppress foreign enterprises.” The ministry also warned that China would “take all necessary measures to safeguard the legitimate rights of Chinese companies and maintain global supply chain stability.”
This tit-for-tat escalation is more than just a spat over shipyards; it’s part of a broader pattern of reciprocal measures between Beijing and Washington, especially as the U.S. tightens its scrutiny of technology exports and defense collaborations in the Indo-Pacific. The latest sanctions come alongside China’s announcement of new special port fees on ships linked to the U.S.—a move that mirrors similar U.S. port fees imposed on Chinese vessels. According to Caixin, China’s Ministry of Transport spelled out that ships built by Chinese shipyards would be exempt from these new fees, while vessels owned or operated by U.S. entities, flying a U.S. flag, or built in the United States would be subject to them. The new rules took effect on October 15, 2025, further tightening the screws on cross-Pacific shipping and trade.
“China just weaponized shipbuilding,” said Kun Cao, deputy chief executive at consulting firm Reddal, in comments to AP. “Beijing is signaling it will hit third-country firms that help Washington counter China’s maritime dominance.” The message is hard to miss: U.S. allies and partners, especially those playing a role in Washington’s strategy to rebuild its own shipbuilding sector, are not immune from the fallout of the U.S.-China rivalry.
South Korea, for its part, finds itself in a delicate position—caught between its longstanding security alliance with the United States and its deep economic interdependence with China. The Korean government has stated it is “closely monitoring developments” and will engage with both sides to minimize any adverse impact on its industries. Analysts warn that this episode could be just the beginning, as South Korean conglomerates operating across both Western and Asian markets become increasingly exposed to the fractures of the global geopolitical order.
Meanwhile, the U.S. Commerce Department has yet to issue an official response to China’s latest move. The broader context is a world shipbuilding industry in flux: China now accounts for more than half of all new shipbuilding globally, South Korea for about 30%, and Japan just over 10%. U.S. businesses, by contrast, represent just 2.9% of world fleet ownership by capacity and a mere 0.1% of global shipbuilding tonnage, according to AP. President Donald Trump has made revitalizing American shipbuilding a centerpiece of his broader push to expand U.S.-based manufacturing, even threatening a new 100% tariff on imports from China in response to Beijing’s export controls on rare earths.
The immediate commercial impact of the sanctions on Hanwha’s operations may be limited, but the political symbolism is unmistakable. As one regional analyst put it, this is “a message to U.S. allies”—a warning that participation in Washington’s efforts to counter China’s dominance comes with real risks. The sanctions also arrive at a time of uncertainty in the broader U.S.-China relationship, with a planned meeting between President Trump and Chinese leader Xi Jinping now in doubt amid the latest round of tit-for-tat measures.
Adding to the complexity, Hanwha Ocean in May 2025 withdrew from a joint venture in China, perhaps anticipating the rough waters ahead. As for the global shipping industry, it now faces a tangle of new port fees, blacklists, and rising regulatory barriers that threaten to further fragment international supply chains.
For now, the world’s major shipbuilders, their investors, and the governments that back them are left to navigate a landscape where economic interests and geopolitical rivalries are increasingly intertwined. The Hanwha Ocean case is a vivid reminder that in today’s world, no company—no matter how global—can remain untouched by the shifting tides of international politics.
