China’s Sanctions on hanwha Raise Concerns for US-Korea Naval Cooperation & South korea’s Shipbuilding Programs
Seoul,South Korea – October 18,2025 - Recent sanctions imposed by china on five Hanwha-affiliated companies,including its U.S.-based shipbuilding operations, are casting a shadow over the enterprising Make American Shipbuilding Great Again (MASGA) program and highlighting challenges within South Korea’s domestic naval progress initiatives. The developments, discussed during a National Assembly defense commitee hearing this week, signal potential disruptions to key defense partnerships and underscore the complexities of navigating geopolitical tensions in the shipbuilding industry.
MASGA Program Faces Potential Headwinds
The Chinese Ministry of Commerce’s decision to prohibit Chinese entities from transacting with Hanwha Philly Shipyard and Hanwha Shipping is widely viewed as retaliation for U.S. defense export controls. while no formal contracts have yet been signed under the MASGA framework, South Korea’s Defense Acquisition Program Administration (DAPA) chief, Seok Jong-gun, cautioned that the sanctions could “eventually influence” the program.
“Currently, the impact is not immediate,” Seok stated during the hearing, responding to concerns raised by Rep. Yoo Yong-won regarding potential damages exceeding $60 million (approximately 85 billion won). “However, sourcing necessary materials and equipment from outside the United States could become significantly more difficult.”
Understanding the Meaning of MASGA
The MASGA program represents a crucial initiative aimed at bolstering U.S.shipbuilding capacity through collaborative efforts with South Korean firms. Hanwha Ocean, a leading naval shipbuilding company in South Korea, is a key participant. President Lee Jae-myung’s visit to Hanwha Philly Shipyard in august during his trip to Washington D.C. underscored Seoul’s strong commitment to the project.
The program’s success is predicated on a streamlined supply chain and access to global components. These sanctions introduce a potential bottleneck, forcing a re-evaluation of sourcing strategies and perhaps increasing costs. As a seasoned observer of the defense industry, I’ve seen firsthand how seemingly isolated trade disputes can ripple through complex international projects like MASGA, impacting timelines and budgets.
The Importance of the RDP-A
To mitigate potential disruptions, South Korea is actively pursuing a Reciprocal Defense Procurement Agreement (RDP-A) with the United States. This agreement would treat South Korean defense products as domestically produced for U.S. government acquisitions, fostering greater integration and reducing reliance on external suppliers.
Seok Jong-gun emphasized the RDP-A’s critical role in supporting the MASGA initiative, stating that the agreement is currently awaiting approval from the U.S. National Security Council. ”We are conveying our position with full clarity,” he affirmed, highlighting the ongoing diplomatic efforts to secure its ratification. A successful RDP-A would provide a significant boost to South Korean defense manufacturers and strengthen the U.S.-Korea alliance.
Domestic Challenges: Delays Plague KDDX Program
Beyond the external pressures of the MASGA program, South Korea’s domestic naval development is facing its own set of challenges. The Korea Destroyer Next-Generation (KDDX) program, a $5.7 billion (7.8 trillion won) project to build six indigenous stealth destroyers, is experiencing significant delays.
Originally slated to enter detailed design and lead ship construction in 2024, the KDDX program has been hampered by legal disputes and intense competition between Hanwha Ocean and HD Hyundai Heavy industries.
Seok Jong-gun acknowledged the program’s setbacks, stating, “Looking back, we should have made decisions more actively in the early stages. now, resolving the problems is taking too much time and money.” he pledged a renewed focus on proactive program management to get the KDDX back on track.
Escalating Tensions Between Korean Shipbuilders
The rivalry between Hanwha Ocean and HD Hyundai Heavy Industries has further complicated the KDDX program.Earlier this year, DAPA extended a security-related penalty against HD Hyundai Heavy Industries for another year, citing a breach of military confidentiality. This action has deepened the existing tensions between the two leading naval shipbuilders, creating a challenging surroundings for collaboration and innovation.
Looking ahead: Navigating a complex Landscape
The confluence of these challenges – Chinese sanctions, MASGA uncertainties, and domestic program delays – presents a complex landscape for South Korea’s defense industry. Successfully navigating this environment will require:
* proactive Diplomacy: continued engagement with the U.S. to secure RDP-A approval