The United States and South Korea have just reached a trade agreement, with the US imposing a 15% tariff on Korean products, while South Korea will invest $350 billion in the United States. South Korean President Lee Jae-myung stated that $150 billion of this investment will be specifically allocated to the shipbuilding industry. Experts believe that this is an additional surprise for the US, indicating that using tariffs as a means to encourage countries to invest in the US is indeed a viable approach. Seoul’s assistance in revitalizing the American shipbuilding industry can help counter China’s dominant position in this sector, with analysts pointing to Trump’s “three-pronged” strategy to contain China.
On Wednesday, July 30, US President Trump announced that the US and South Korea had reached a trade agreement, imposing a 15% tariff on Korean products, while South Korea will invest $350 billion in the US and open its markets to American goods.
South Korean President Lee Jae-myung posted on Facebook that the $350 billion fund will play a crucial role in promoting Korean companies’ active entry into the US market, especially in industries where Korea has advantages such as shipbuilding, semiconductors, batteries, biotechnology, and energy.
Lee Jae-myung also expressed in his post, “I hope to strengthen Korean-American industrial cooperation and consolidate the alliance between Korea and the United States through this fund.”
According to Lee Jae-myung, the $150 billion earmarked for investment will specifically focus on the shipbuilding industry. In a post on Thursday, he mentioned that this move will support Korean companies such as Hanwha Marine, HD Hyundai Heavy Industries, in entering the American shipbuilding industry.
Earlier reports from Korean media suggested that Seoul proposed a project called “Making American Shipbuilding Great Again,” involving substantial investments by Korean shipbuilding companies in the US and government financial support measures. It is reported that South Korean state institutions like the Korea Export-Import Bank and the Korea Trade Insurance Corporation are considering participating in this project.
Taiwan’s National Defense Security Research Institute researcher Shen Ming-shi told Epoch Times that South Korea’s shipbuilding industry being able to invest in the US immediately is very helpful in narrowing the gap between the US shipbuilding industry and China’s capabilities. “This is an additional surprise,” he added.
He believes that this agreement can also have a landmark effect, prompting other shipbuilding countries to follow suit. Whether it is military ships or commercial vessels, more orders will be placed in the US to meet American demands.
“The main point is symbolically showing that it is indeed a feasible route for the US to encourage countries to invest in different industries in the US using tariffs. Countries with high tariffs will consider putting more investments into various industries in the US, whether it be defense, shipbuilding, or semiconductor industries,” Shen Ming-shi explained.
South Korean shipbuilding companies rank second in global market share after China and are believed to assist Washington in revitalizing the American shipbuilding industry and countering China’s dominant position.
The US government considers strengthening the domestic and allied shipbuilding industries as a top priority, as China has rapidly taken over a significant portion of the global shipbuilding business in the past few decades, gaining a substantial economic and military advantage.
Su Zi-yun, Director of the Strategic and Resource Department at Taiwan’s National Defense Security Research Institute, stated to the Epoch Times that this initiative aims to make American shipbuilding great again. It can at least address the shortage of US Navy ships and accelerate President Trump’s efforts to revitalize the navy. Shipbuilding is just the beginning, with hopes of driving investments in the semiconductor or automotive industries that already have a presence in the US.
Su Zi-yun pointed out that one reason for the contraction of the shipbuilding industry in the US is low enthusiasm among new workers. When Korean shipyards come to the US, they are likely to introduce their advanced robotic welding machines to address the shortage of capabilities.
He believes that South Korea may also have other cooperation projects with Beijing to maintain balance and not rely solely on one strategy. The US strategy with tariffs is playing a major card, while other projects with China may be seen as minor ones.
During a speech in Congress on March 4th, Trump stated, “To strengthen our defense industrial base, we will also revitalize our shipbuilding industry, both commercial and naval.” He added that tax incentives would be implemented to promote the development of the domestic shipbuilding industry.
In April, Washington announced plans to impose high port fees on ships built or operated by China starting October. Each ship related to China sailing in US waters will be charged port fees based on tonnage, up to five times a year. However, orders have surged even before the enforcement of this policy.
In the first half of 2025, South Korea’s shipbuilding industry saw a strong rebound in order volume, particularly in the container ship sector. A report from the Overseas Economic Research Institute of the Korea Development Bank released on July 29 stated that South Korea’s market share of new ship orders (in total ship tonnage) rose from 15% last year to 25.1% in the first half of this year, whereas China’s share dropped from 70% to 51.8%.
In July, Japan also reached an agreement with the US to establish a $550 billion fund for investment in various projects, including construction and modernization of American shipyards.
Analyzing Trump’s current tariff-led strategic layout, Su Zi-yun stated that Trump’s first strategic goal is to contain China, with economic warfare as a tool, tariffs being a component to stimulate investment in the US, enhance America’s overall strength, and suppress China. “First, economic pressure, then technological pressure. The third step is to integrate both economic and technological advantages into military capabilities, employing the ‘three-pronged’ strategy to counter China.”