China sanctions 5 US units of South Korean shipbuilder over probe by Washington

China’s Commerce Ministry said Tuesday it was banning dealings by Chinese companies with five subsidiaries of South Korean shipbuilder Hanwha Ocean in the latest swipe by Beijing at US President Donald Trump’s effort to rebuild the industry in America.

The ministry also announced that it was also investigating a probe by Washington into China’s growing dominance in world shipbuilding and threatened more retaliatory measures. It said the US probe endangers China’s national security and its shipping industry and cited Hanwha’s involvement in the investigation.

The US Trade Representative launched the Section 301 trade investigation in April 2024. It determined that China’s strength in the industry was a burden to US businesses.

“China just weaponized shipbuilding,” said Kun Cao, deputy chief executive at consulting firm Reddal. “Beijing is signaling it will hit third-country firms that help Washington counter China’s maritime dominance.”

International shipping and shipbuilding have yet another areas of friction between Washington and Beijing. Each side has imposed new port fees on each others’ vessels that took effect on Tuesday.

Hanwha Ocean’s shares traded in South Korea fell as much as over 8 percent on Tuesday.

The company said Tuesday via email that it was reviewing the situation.

The sanctioned entities are Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC and HS USA Holdings Corp.

A truce in the trade war between the world’s two biggest economies appears to have unraveled after US President Donald Trump threatened a new 100 percent tariff on imports from China, expressing frustration over new Chinese export controls on rare earths.

The escalation of antagonisms raised doubts over whether Trump and Chinese leader Xi Jinping will go ahead with a meeting planned for late this month. But Beijing said on Tuesday that China and the US held working-level talks on Monday and have maintained communication.

South Korea and the US have been building closer ties in shipbuilding in response to China’s dominance as the world’s largest shipbuilder.

In late 2024, Hanwha acquired the Philly Shipyard in Pennsylvania for $100 million . It announced in August that it plans to invest $5 billion in new docks and quays as part of its support for US efforts to restore globally competitive shipbuilding capacity.

Last year, Hanwha Ocean also secured contracts with the US Navy to perform maintenance, repair and overhaul work for US naval vessels.

China said its new port fees would apply to ships owned by US companies or other entities or individuals, those operated by US entities including those having a US stake of 25 percent or more, vessels flying a US flag and vessels built in the United States, mirroring in many aspects the US’s port fees on Chinese ships.

US businesses represent just 2.9 percent of world fleet ownership by capacity and 0.1 percent of global shipbuilding tonnage. Trump has vowed to help rebuild the industry as part of his broader push to expand US-based manufacturing.

Hanwha Ocean said in May that it was withdrawing from a joint venture in China.