On Tuesday, October 14, 2025, China made a significant announcement, imposing sanctions on five U.S.-linked subsidiaries of Hanwha Ocean, a major South Korean shipbuilder. This action immediately sent the company’s shares plummeting, underscoring the severe impact of escalating trade tensions between the world’s two largest economies.
The timing of China’s move, as revealed by its Commerce Ministry, is particularly notable. It came on the very day both China and the U.S. began implementing additional port fees targeting each other’s vessels. Interestingly, China’s new regulations included an exemption for ships built within its own borders.
According to the Ministry’s statement, all Chinese organizations and individuals are now forbidden from engaging in any transactions, cooperation, or related activities with the sanctioned Hanwha entities. Beijing justified these countermeasures by stating that “Hanwha Ocean’s U.S.-related subsidiaries have assisted and supported the U.S. government’s relevant investigative activities, thereby jeopardising China’s sovereignty, security, and developmental interests.” The ministry did not provide further specific details regarding these alleged activities.
Hanwha Ocean has not yet issued an immediate response to these developments.
This latest escalation follows Hanwha’s announcement in August regarding a substantial $5 billion additional investment into the Philly Shipyard. Hanwha had acquired this shipyard in 2024 for $100 million, a move that followed South Korea’s commitment to inject up to $150 billion into the U.S. effort to revitalize its domestic shipbuilding industry.
The administration of President Donald Trump had previously emphasized the critical need for assistance from allies like Japan and South Korea to bolster the struggling U.S. shipbuilding sector, which has fallen significantly behind China, particularly in the production of warships.
Adding to the dynamic landscape, Hanwha’s primary domestic competitor, HD Hyundai Heavy Industries, which holds the title of the world’s largest shipbuilder, was reportedly in discussions with various companies in September regarding the acquisition of U.S. shipyards.
It’s worth noting that Hanwha also operates a shipyard in Shandong, China, where it manufactures modules for ship components. These modules are then transported to its South Korean shipyard for final assembly.
In the wake of China’s sanctions announcement, Hanwha Ocean’s shares dropped by 5.3% by 0417 GMT, while HD Hyundai Heavy experienced a 4.4% decline.
Earlier this year, Mr. Trump’s administration had unveiled plans to impose fees on China-linked vessels. The stated aim was to reduce Beijing’s dominance in the global maritime sector and strengthen U.S. shipbuilding capabilities. China swiftly retaliated last week, declaring its intention to levy its own port fees on U.S.-linked vessels, effective on the same day the U.S. measures took effect.
Beijing has consistently condemned the U.S. actions targeting its maritime, logistics, and shipbuilding industries, labeling them as a “serious violation of international law and fundamental norms of international relations.”