Asia’s fourth largest economic system South Korea, like many different Asian nations is going through painful tariffs by U.S. President Donald Trump, however its shipbuilding business may show a helpful bargaining chip.
Already hit by sector levies on metal and automobile exports, Seoul is laser-focused on negotiations over a 25% country-specific tariff that has been suspended till July 8.
Here’s a take a look at what is going on on:
Why shipbuilding?
In the Nineteen Seventies, South Korea’s navy chief president Park Chung-hee accelerated the nation’s heavy business, designating sectors reminiscent of metal and shipbuilding “strategically important” and rolling out state subsidies.
At the identical time, POSCO was based, now one of many world’s largest metal producers and conglomerate Hyundai constructed its shipyard in southeastern Ulsan, which began to develop quickly.
European rivals struggled to maintain tempo.
Sweden’s Kockums Shipyard filed for chapter in 1987 and in a symbolic shift of worldwide shipbuilding energy, Hyundai acquired its 140-meter (460-foot) Goliath crane for $1. It now towers over southern Ulsan.
In the Nineteen Nineties and 2000s, South Korean shipbuilders reminiscent of Hyundai Heavy Industries and Samsung Heavy Industries ramped up funding in analysis and improvement, backed by beneficiant authorities subsidies.
The nation secured a aggressive edge in high-value-added vessels, together with liquified pure fuel (LNG) carriers, very massive crude carriers, and offshore platforms.
Now, South Korea ranks because the world’s second-largest shipbuilding nation, trailing solely behind China.
Is it essential?
South Korea’s exports hit a document excessive in 2024, with analysts pointing to shipbuilding as one of many key drivers.
The sector accounted for almost 4% of whole exports and grew by virtually 20% from the earlier yr, reaching $25.6 billion.
Shipbuilding straight employs round 120,000 staff or roughly 1% of the nation’s whole workforce; with oblique employment considerably greater in industrial hubs like Ulsan.
Industry information reveals thus far this yr that new orders have exceeded 13 trillion gained ($9.4 billion).
In March, Hanwha Ocean secured a landmark $1.6 billion contract to construct LNG carriers for Taiwan’s Evergreen Marine, one of many largest single orders within the sector this yr.
Why is it a ‘bargaining chip’?
Trump has confirmed “significant interest in South Korea-U.S. shipbuilding cooperation,” mentioned South Korea’s commerce, business and power minister Ahn Duk-geun in April.
Like the Europeans, the U.S. shipbuilding business has lagged behind South Korea and China, and in consequence, the sector is seen as a “highly important bargaining chip in trade negotiations,” he added.
At an APEC finance ministers’ assembly in South Korea in May, U.S. Trade Representative Jamieson Greer met Chung Ki-sun, vice chair of HD Hyundai, the nation’s largest shipbuilder, earlier than he met Seoul’s prime officers.
“South Korea’s shipbuilding and defense industries see a window of opportunity,” mentioned Kim Dae-jong, a professor at Sejong University.
How does it assist the U.S.?
Greer additionally met with the CEO of Hanwha Ocean, the primary non-American firm licensed to hold out a dry-dock upkeep of a U.S. Navy vessel.
The transfer final September was seen as important because it signalled that Washington sees South Korea, the place it already has 28,000 U.S. troops stationed, as a strategic protection hub.
With worries rising about China’s increasing naval fleet and potential battle within the Taiwan Strait, the U.S. has begun in search of dependable abroad shipyards to assist its operations within the Asia-Pacific area.
The international marketplace for ship upkeep, restore, and overhaul is projected to exceed $60 billion yearly, in accordance with business estimates.
Any issues?
Despite multibillion-dollar contracts, information suggests South Korea’s shipbuilding business is dropping floor within the international race.
China dominates with South Korea’s market share dropping, in accordance with business information.
Demand for eco-friendly vessels is rising, and the federal government have to overhaul laws “to support the development of next-generation eco-friendly vessels,” Rhee Shin-hyung, a professor at Seoul National University, instructed Agence France-Presse (AFP).
South Korea’s woeful demographics additionally make staffing arduous. In Geoje, residence to Samsung Heavy Industries, the variety of residents of their 20s and 30s has almost halved in recent times.
Orders are down in 2025 which hints that “the shipbuilding boom may end sooner than the market anticipated,” warned Rhee.
Global ship orders between January and April fell by virtually half the amount recorded throughout the identical interval final yr.
Shipbuilders have been having fun with a “supercycle” however sadly the “peak is expected to be lower and the boom shorter-lived compared to the past,” Nam Chul, vp at HD Hyundai Heavy Industries, instructed AFP.
Source: www.dailysabah.com