By Timothy W. Martin and Soobin Kim

SEOUL -- In July, as the U.S. and South Korea entered a decisive phase of trade talks between the two countries, South Korean negotiators brought a sealed box for their American counterparts.

Inside the box -- which had been rushed from South Korea to Washington on a Korean Air flight -- sat 10 red baseball caps bearing the slogan "Make America Shipbuilding Great Again," or MASGA. U.S. and Korean flags adorned the hats.

Along with the hats came a pledge: Seoul promised to spend $150 billion to help the U.S. revive its ship manufacturing, which has fallen badly behind China and has become a central concern for the Trump administration.

"Great idea," Commerce Secretary Howard Lutnick told the South Korean negotiators. The two sides soon sealed a trade agreement that, along with investment pledges for ships and other sectors, cut the country's reciprocal tariff rate and levies on cars. Seoul agreed to buy $100 billion in U.S. energy, too.

In recent weeks, MASGA has become something of a national rallying call in South Korea, whose leader, Lee Jae Myung, holds his first face-to-face meeting with President Trump at the Oval Office on Monday. On the table are major issues that could transform the U.S.-South Korean alliance: tariffs, the role of U.S. troops stationed in South Korea and Seoul's defense spending.

Seoul officials believed no issue held the same potential with Trump as shipbuilding. The president has often lamented the erosion of American maritime manufacturing, vowing a swift turnaround through special tax incentives and a new White House office dedicated to shipbuilding.

Japan, which is also negotiating tariffs with the Trump administration, has suggested it could help boost American shipbuilding power, too. But Japan's largest shipmaker, Imabari Shipbuilding, recently said directly supporting the U.S. shipbuilding industry is difficult.

South Korea has been more eager. It is home to the world's largest shipyard and ranks as the biggest global producer after China, whose commercial shipbuilding is less technologically advanced. The trade breakthrough prompted Trump to extend the White House invitation to Lee, a left-leaning politician who took office in early June.

Koo Yun-cheol, South Korea's finance minister and a top trade negotiator, said "the MASGA project contributed most significantly" to a tariff agreement.

Seoul officials have said the $150 billion investment in U.S. shipbuilding could encompass purchases of American shipyards, workforce training, supply-chain restructuring, repairs and other areas.

'A lot to offer'

After meeting with Trump, Lee is scheduled to visit Hanwha Philly Shipyard, which was acquired last year by South Korea's Hanwha Ocean, a shipbuilding company, for roughly $100 million. It is the first and only South Korean purchase of a U.S. ship-production site.

Hanwha's acquisition drew praise at the time from then-U.S. Navy Secretary Carlos Del Toro, who said the Philadelphia shipyard's workforce would double in size and manufacturing capacity would quadruple, allowing it to compete for both commercial and naval shipbuilding contracts.

South Korea's robust naval supply chain and the country's deep-pocketed conglomerates that own big maritime groups have allowed the top firms to weather downturns in the boom-or-bust shipbuilding industry and to continue to invest in new technology.

HD Hyundai Heavy Industries, which operates the world's largest shipyard in Ulsan, South Korea, could make a U.S. destroyer there at roughly half the cost it would take in the U.S. and two-thirds the time, according to industry officials. But U.S. regulations forbid building American commercial or military ships overseas.

Buying an American shipyard, like Hanwha did, is an option under consideration by HD Hyundai, said Jeong Woo-maan, the firm's head of planning for the naval business. But rebuilding U.S. shipbuilding capacity would require a deeper pool of workers, infrastructure and suppliers, something that would take years to build, he said.

HD Hyundai in recent months has agreed to advise some of the U.S.'s largest military and commercial shipbuilders on how to build their capacity.

"South Korea can help shorten that timeline for the U.S., reducing the trial-and-error that would otherwise be wasted in the learning process," Jeong said. "We have a lot to offer."

Help is needed. The U.S. represents less than 1% of global commercial shipbuilding -- dwarfed by China's roughly 60%, according to Clarksons Research. South Korea ranks at No. 2 with 22%.

U.S. shipbuilding weakness particularly matters in the context of a potential showdown with China over Taiwan. Beijing's naval fleet now outnumbers America's, with the gap expected to widen in the years ahead. Meanwhile, the U.S. fleet faces production backlogs, and it is shrinking as it retires ships.

Beijing has pledged to seize control of Taiwan, potentially by force. Taipei officials have contemplated a potential Chinese invasion as soon as 2027, with the Pentagon expressing a similar possible timeline.

Potential fixes

A lot of the maintenance, repairs or overhaul work for American military ships still occurs in Guam, Hawaii or the continental U.S. Shifting more of that fix-up work to Indo-Pacific shipyards would free up the U.S.-based ones to focus on new building, said Peter Lee, a research fellow at the Asan Institute for Policy Studies, a Seoul-based think tank.

It would also give Washington closer options for repairing damaged vessels should a Taiwan conflict occur, he said. "The U.S. could have access to allied shipyards and bases, all the way up and down the Indo-Pacific," Lee said. "That will be an advantage that China simply doesn't have."

Over the past year, Hanwha and HD Hyundai have won four maintenance deals with the U.S. Navy for repairs of noncombatant ships that fall under the Japan-headquartered 7th Fleet's region. U.S. regulations generally limit such work by foreign shipyards to auxiliary and supply vessels during routine port visits for safety-related or mission-critical situations.

HD Hyundai landed its first maintenance project earlier this month. By year's end, the company aims to win one or two more such repair jobs, after which it will evaluate whether it should secure a dedicated shipyard for such work, said Jeong, the HD Hyundai executive.

This type of maintenance work isn't particularly lucrative, Jeong added, though it shows how HD Hyundai is an ally, not a competitor, to the U.S. "We feel it is something we must do in order to build trust," he said.

Samsung Heavy Industries, which doesn't make military vessels, also said it would review whether to pursue American naval repairs. Hanwha said it would continue to expand its repair-work business with the U.S., including on combat ships, should the legal restrictions be eased.

The relaxing of some of those U.S. impediments was the focus of a House bill proposed earlier this month by Rep. Ed Case, a Democrat from Hawaii, and Rep. James Moylan, a Republican from Guam. The legislation proposes establishing a "foreign ally shipping registry." Countries on that list, which could include South Korea and Japan, would be exempted to build and fix more American ships.

Write to Timothy W. Martin at Timothy.Martin@wsj.com

(END) Dow Jones Newswires

August 24, 2025 09:00 ET (13:00 GMT)

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