Facing a steep decline in its shipbuilding capabilities and the growing maritime dominance of China, the United States is actively seeking to partner with South Korea to revive its naval and commercial shipbuilding industries. South Korea, the world’s second-largest shipbuilder, is now seen as a vital strategic partner in a sector critical to global trade and national security.

According to South Korean Trade Policy Director Chang Sung-gil, “The United States feels a sense of crisis that China’s market share in the shipbuilding sector is growing and is tapping Korea as a strategic partner.” His remarks came during a policy forum where he confirmed that the U.S. is encouraging Seoul to join efforts to curb China’s shipbuilding rise through closer cooperation.

The Urgency Behind U.S. Interest

The U.S. Navy is currently struggling to keep up with China’s fleet size. As of 2024, China had over 370 naval vessels and is on track to surpass 400 this year. By comparison, the U.S. fleet stands at 295 ships. The Chinese shipbuilding industry, combining both commercial and military output, now has 230 times the capacity of the United States. Most of China’s warships have been designed since 2010, while only 25% of U.S. ships fall into that category.

Meanwhile, America’s commercial shipbuilding sector has nearly collapsed. Where the U.S. once had over 300 shipyards in the 1980s, fewer than 20 remain. A Congressional Budget Office report in 2025 concluded it would be virtually impossible for U.S. yards to meet current naval construction goals alone.

In response, the Trump administration has created a White House shipbuilding office and introduced new legislation to revive the industry. But it’s clear that the U.S. cannot go it alone. As Senator Mike Lee put it, “These bills are about leveraging our diplomatic relationships and the comparative advantages of our allies to ensure America remains at the forefront of maritime security.”

Why South Korea Is a Strong Fit

South Korea’s shipyards are among the most efficient and technologically advanced in the world. In 2024, it captured 17% of global new ship orders—second only to China’s 71%. Major players like HD Hyundai Heavy Industries and Hanwha Ocean produce over 220 vessels a year, ranging from commercial tankers to advanced warships and submarines.

These companies already supply ships to NATO countries and maintain U.S. Navy support ships. Hanwha Ocean recently acquired Philly Shipyard in the U.S., and HD Hyundai has partnered with American defense contractor Huntington Ingalls to implement smart shipyard technology, including robotics and digital twin systems. This positions South Korean firms to help revitalize U.S. yards with automation and advanced manufacturing.

South Korea also offers valuable experience in building specialized ships, such as icebreakers. As the U.S. seeks to counter Russia’s 30-vessel icebreaker fleet, Korea’s capabilities offer an immediate path forward—especially since no American firm has built such ships in decades.

Despite the advantages, legal barriers still restrict U.S. cooperation. Two key laws—10 U.S.C. 8679 and 8680—prohibit or severely limit the use of foreign shipyards for naval construction and maintenance. These rules may only be waived by the president for national security reasons. Some lawmakers, such as those behind the Ensuring Naval Readiness Act, are trying to change that.

Politically, there are also tensions. President Trump has criticized South Korea’s trade practices and tariffs, calling for more favorable terms for American exports. At the same time, South Korea is in the midst of political turmoil after declaring martial law and undergoing a contentious presidential impeachment process. This has slowed high-level diplomatic coordination.

Still, both sides have clear reasons to press forward. South Korea needs new export markets, especially as domestic ship demand shrinks. The U.S. needs fast-track access to advanced shipbuilding capability to compete with China.

China’s Likely Response

China has warned against any alliance that excludes or harms its interests. “No agreement or negotiation should harm the interests of third parties,” said Chinese foreign ministry spokesperson Mao Ning. China is expected to view U.S.-South Korea maritime cooperation as a direct challenge to its shipbuilding dominance and a geopolitical move to limit Beijing’s influence over global shipping lanes.

China’s aggressive use of subsidies and state-backed production has already pushed many rivals out of the commercial shipbuilding market. A deeper U.S.-Korean alliance could disrupt these dynamics and challenge China’s hold over global maritime trade.

Experts suggest several starting points for U.S.-South Korea collaboration:

• Shared Maintenance Programs: Korea is already servicing U.S. ships under the Navy’s Regional Sustainment Framework. Expanding this to more vessels could ease bottlenecks in the U.S. fleet.
• Support Ships First: Because they carry less classified technology, support vessels could be a politically safe area to begin co-production and avoid national security conflicts.
• Clear Demand Signals: The U.S. Navy needs to communicate future shipbuilding needs more transparently, including timelines and contract scopes, to give Korean firms the confidence to invest.
• Multi-Year Contracts: Moving from one-off overhauls to long-term MRO agreements could stabilize both workforces and supply chains.

The Strategic Payoff

A successful U.S.-South Korea partnership in shipbuilding would achieve multiple goals: boost naval readiness, reduce dependency on Chinese-built ships, lower costs through scale, and solidify a key regional alliance. If Japan joins as a third partner—another leading shipbuilding nation—the result could be a powerful trilateral maritime force.

As former defense official Jinho Park put it, “Teaming with South Korea, a trusted ally for 70 years, could be the best solution to urgently revive a collapsing U.S. shipbuilding industry and maintain U.S. maritime leadership.”