Posted on July 14, 2025
Trump signed an executive order in April to restore ‘America’s maritime dominance’ – but needs Asian investment to do it
The White House is eyeing a trade deal with South Korea in return for investment in US shipbuilding.
Howard Lutnick, the US Commerce secretary, held tariff negotiations with his South Korean counterpart in Washington on Thursday where they discussed the prospect of cooperating on ship manufacturing as part of a potential trade agreement.
Mr Lutnick and trade representative Jamieson Greer were “very interested” in a proposal for South Korean companies to contribute towards Washington’s goal of growing its shipbuilding sector in exchange for tariff relief, according to Yeo Han-koo, South Korea’s trade minister.
“The US side was very interested in bilateral collaboration in the areas of shipbuilding and semiconductors, as they are crucial sectors in terms of industrial competitiveness and national security, and in how Korean companies can contribute to Washington’s goal of rebuilding its manufacturing sector,” Yeo told reporters.
It comes after Donald Trump fired off letters to 14 world leaders including Shigeru Ishiba, Japan’s prime minister, and Lee Jae-myun, South Korea’s president, who he threatened with a blanket 25 per cent tariff, starting from August 1.
The move is the latest instance of the president using tariffs as a negotiating tactic to enlist the support of trading partners to achieve his other policy goals.
A source close to the White House said that rumours of trade deals with South Korea and Japan in exchange for Asian investment in US shipbuilding are “absolutely true”.
“[The treasury is] trying to extract as much as they can from these countries,” the source said.
China is the global leader in shipbuilding
The president signed an executive order in April to restore “America’s maritime dominance” by “pledging to revitalise and rebuild” US shipbuilding.
Golden opportunity
The US navy has 296 battle ready ships and has pledged to increase that number to 381 over the next 30 years – a plan that would require investing at least $40 billion each year, according to the Congressional Budget Office.
Once a dominant force in shipbuilding, the US now lags far behind its greatest rival, China, which has over 370 ships and submarines.
Last year, one of China’s largest shipyards built more commercial vessels by tonnage than the entire US shipbuilding industry has produced since the end of the Second World War.
While China is the global leader in shipbuilding, holding a 50 per cent share of the world’s capacity, Japan and South Korea are two of the next biggest players, producing around 40 per cent of the world’s ships between them.
A deal with Seoul and Tokyo could therefore provide a golden opportunity for investment in US shipbuilding.
Avoid tariffs
Such an agreement would likely mirror the merger of US Steel with Japanese-owned Nippon Steel, which Mr Trump approved in June.
Under the terms of the $14.9bn deal, Nippon Steel pledged to invest $11bn in US Steel by 2028 and granted the US government a “golden share” in the company, giving it say over key decisions, including production outside of the US.
The proposal from South Korea is indicative of the way in which US trading partners are looking for concessions they can make to Mr Trump in order to avoid tariffs.
China has become a shipbuilding powerhouse
On Tuesday, Benjamin Netanyahu became the latest world leader to nominate Mr Trump for a Nobel Peace prize – an award the US president has long-coveted – following hot on the heels of leaders from Pakistan and the Democratic Republic of Congo.
In talks with African leaders at the White House on Wednesday, the leader of Liberia floated the prospect of US investment in the country’s rich mineral reserves in exchange for agreeing to accept migrants awaiting asylum hearings.
‘Not a grand conspiracy’
Richard Stern, the director of the Grover M Hermann Centre for the Federal Budget, at the conservative Heritage Foundation think tank, said the prospect of a deal with Japan and South Korea on shipbuilding was a “welcome step”.
“Decades of regulatory and tax burdens have decimated US shipbuilding capacity – creating a critical defence as well as commercial issues,” he said.
“On top of the tax reform in ‘One, Big, Beautiful Bill’ and the deregulatory work of the administration, it is a welcome step that the president is focusing his trade negotiations with Japan and Korea on bringing shipyard investments back to America.”
Kush Desai, a White House spokesman, said: “Countries coming and investing in the United States is something we are looking for, but this was not a grand conspiracy to get Japan and South Korea to invest in our shipbuilding industry.”
