“Make American Shipbuilding Great Again:” The US-South Korea Deal
By Anna Toso | 12 September 2025
Summary
On 25 August 2025, the United States (US) President Donald Trump and South Korean President Lee Jae Myung agreed on the strategic partnership “Make American Shipbuilding Great Again” (MASGA), capitalising on Korean expertise in the sector.
Although this partnership highly benefits Korean shipbuilding companies, American tariffs damage the Asian country’s export-oriented economy, and its national defence remains highly reliant on American provisions.
During the next years of Trump’s administration, there is the realistic possibility that American policy volatility will undermine the profitability of the long-term investments related to MASGA, at the expense of Korean shipmakers.
On 25 August, in Washington, South Korea's newly elected President Lee Jae Myung made his first official visit to US President Donald Trump for security and trade negotiations. The meeting, which built upon the earlier tariff agreement signed in July 2025, led to a lower 15% tariff on South Korea. Despite the positive achievement compared to the initially threatened 25%, it represented a significant regression from the preexisting extensive free trade regime. In exchange, South Korea committed to investing USD 350b in the US, of which USD 150b will fund a shipbuilding partnership. Lee’s strategy, “Make American Shipbuilding Great Again” (MASGA), will foster technological innovation and warship production capacity in American shipyards, reviving a sector where the US is lagging behind.
American shipyards are outdated. Some workshops have been in operation since World War II and require significant capital investments to prevent obsolescence of the production processes. Furthermore, in the last few decades, the industry has failed to retain expert technical personnel due to uncompetitive wages and unsatisfactory working conditions. As a result, the US only accounts for 0.04% of global shipbuilding output. A share that has consistently declined since 2017.
Trump, eager to reverse this decline, has sought international partnerships. In April 2025, Trump secured cooperation in the naval sector for defence purposes with the Italian Prime Minister Giorgia Meloni. Nonetheless, despite relevant companies such as Fincantieri, Italy only represents 0.64% of the global vessel production. Whereas, the Korean shipbuilding industry - 28% of global production - is experiencing fully-booked yards and surging ship exports that reached a value of USD 26b in 2024, driven by rising global demand. Clients flocked to the Korean shipmakers after Trump announced levies on commercial vessels made in or operated by China docked in US ports in March 2025. These surcharges were later reduced and will be implemented in October 2025, with only marginal disruptions to global trade.
As with the Italo-American cooperation, the shipbuilding deal with Korea aims to improve the US position in its competition with China. The latter hosts the largest naval force and shipbuilding industry globally, accounting for 53% of the world’s vessel production, a figure that has risen steeply in the last decade at the expense of the preceding South Korean market dominance. Chinese shipbuilders offer high volumes, cheap prices, and increasingly innovative solutions, threatening Korea’s technological advantage. Thus, anti-China policies align with both American and Korean strategic interests.
The MASGA deal involves, firstly, the purchase of ships by the US from providers in South Korea. Secondly, it will evolve into reviving American domestic production, due to maintenance, repair, and overhaul (MRO) projects by world-class Korean operators. However, long-standing protectionist American legislation, such as the Byrnes-Tollefson Amendment and the Jones Act, might hamper the first part of the project, since the manufacture of US Navy warships abroad and the use of non-domestically-built vessels to transfer goods across American ports are prohibited.
Regarding the second component of the agreement – improving domestic shipmaking capacity – companies from the two countries signed 11 non-binding industrial agreements to operationalise the pledged investments. Among the array of Korean companies that will expand their presence in the American naval market, HD Hyundai will provide marine logistics infrastructures and advanced technological equipment, partnering with the American Huntington Ingalls and Edison Chouest Offshore. Meanwhile, Samsung Heavy Industries will partner with Vigor Marine Group in maintenance, modernisation, and construction of US vessels. Hanwha Group, owner of Philadelphia’s shipyard since December 2024, plans to invest USD 5b to scale up the facilities’ annual production capacity from 2 to 20 vessels and become the first builder of LNG carriers. Overall, these contracts place Korean businesses in a strategic position within the global shipbuilding supply chain. These agreements also include the US among the countries where Korean vessel manufacturers can expand their export and production sites. Evidently, MASGA yields considerable benefits for the Asian economy.
Although South Korea could play an instrumental role in reviving the US commercial and military shipbuilding, the Asian country also relies on the American counterpart for its national security. Currently, the US provides 28,500 troops and nuclear deterrence to South Korea, key to its national defence against North Korea. Trump revealed the intention of deploying the US forces for more diverse operations, such as countering China. Lee did not welcome the proposal, preferring to preserve balanced relations of Seoul with both Washington and Beijing. These dynamics underscore the precarious nature of the overall strategic partnership between the two countries.
R'lyeh Imaging/Wikimedia Commons, CC BY 2.0
Forecast
Short-term (Now - 3 months)
Trump will highly likely meet the South Korean counterpart again in October 2025 at the Asia-Pacific Economic Cooperation (APEC) forum, following the latter’s invitation.
There is a realistic possibility that Trump will also pursue talks with the North Korean President during the summit, although this is unlikely to occur, given Kim Jong-un’s lack of response to Trump’s latest requests for contact.
Medium-term (3-12 months)
Trump will likely use his presidential power to remove some of the limits on the import and use of foreign-manufactured vessels to maintain US commercial competitiveness and meet its significant warship demand, as reviving the national shipbuilding industry via domestic production would require years.
Long-term (>1 year)
Investments in shipmaking are only profitable in the long term due to the intrinsic long duration of the production cycle. Therefore, it is a realistic possibility that Trump’s unpredictable political U-turns and the policies of future American administrations may undermine the ambitious plans and significant investments of the Korean government and companies to revive the shipbuilding ecosystem in the US.
