The South Korean government stated that the shipbuilding cooperation plan, “Make American Shipbuilding Great Again” (MASGA), was key to the conclusion of the US-South Korea tariff agreement.
On July 30, US President Trump announced a trade agreement with South Korea, which will impose a 15% tariff on South Korean goods. South Korea pledged to invest $350 billion in the US, with $150 billion earmarked for a joint shipbuilding partnership. South Korean Deputy Prime Minister and Minister of Strategy and Finance Koo Yun-cheol stated that this approximately $150 billion partnership, led by South Korean shipbuilding companies, will help rebuild the US shipbuilding industry.
To secure more favorable tariff terms, South Korean officials have sought to strengthen their bargaining power by establishing a shipbuilding partnership with the US Navy, including providing repair services to the US Navy fleet, as the US rushes to catch up with China’s massive naval shipbuilding.
Koo Yun-cheol said, “The most noteworthy part of this agreement is the US$150 billion Korea-US shipbuilding cooperation plan, known as the MASGA plan. I believe the MASGA project played a decisive role in the conclusion of the current agreement.”
The MASGA project consists of three core components: building a new shipyards in the US, training professional shipbuilders, and providing maintenance services for US Navy ships. However, experts point out that South Korea still faces challenges in investing in shipyards in the US and building new ships there, including difficulties in supplying steel plates and other components.
Previously, Koo Yun-cheol and other senior South Korean officials met with US President Trump at the White House to reach an agreement before the August 1 deadline. Koo Yun-cheol revealed that during the meeting, Trump expressed his hope to “see ships built in the US as soon as possible” under this cooperation framework.
South Korean defense and shipbuilding giant Hanwha Group is accelerating its expansion into the US shipbuilding market. Last year, its subsidiaries Hanwha Systems and Hanwha Ocean acquired the Philly Shipyard in Pennsylvania for US$100 million and renamed it Hanwha Philly Shipyard.
Hanwha Group plans to strengthen its presence in the US shipbuilding market by leveraging Hanwha Philly Shipyard’s production capacity and market experience. Hanwha Group claims that Hanwha Philly Shipyard is expected to become an important base for the U.S. Navy’s shipbuilding and maintenance, repair, and overhaul (MRO) operations in the future. Hanwha Group plans to continue securing shipbuilding contracts in the U.S. market through such cooperative models between Korean and U.S. shipyards. In addition to commercial shipbuilding, Hanwha Group is expected to secure U.S. naval vessel orders through Hanwha Philly Shipyard, including new construction projects.
Following the announcement of the tariff agreement (including the shipbuilding cooperation plan), Hanwha Ocean’s stock price rose 13% at the close of trading on July 31. However, due to the impact of its investment in the US, Hanwha Systems, which holds a 60% stake in Hanwha Philly Shipyard, announced last week that its second-quarter operating profit plummeted 60% due to costs related to the acquisition of the Philly Shipyard. As the shipyard continues to invest funds and manpower to upgrade its outdated facilities, it is expected to take some time before it becomes profitable.
It is reported that in the second quarter of 2025, Hanwha Philly Shipyard incurred an operating loss of 29.2 billion won, a further increase from the 2 billion won loss in the first quarter. The shipyard has been operating at a loss for seven consecutive years since 2018 and is also expected to struggle to achieve profitability this year.