As the U.S. midterm elections kick off, the American shipbuilding industry is keenly watching the potential impact on the Korea-U.S. Shipbuilding Cooperation Make American Shipbuilding Great Again (MASGA) project. Analysts suggest that the new congressional makeup could affect the trajectory of shipbuilding cooperation legislation championed by the Trump administration.
However, the prevailing view is that U.S.-South Korea cooperation will persist, given the bipartisan consensus on bolstering naval strength and countering China’s influence.
Focus Turns to Overseas Warship Construction and Passage of Shipbuilding Legislation
Industry sources report that U.S. midterm elections are underway on Tuesday. The entire House of Representatives (435 seats) and 35 Senate seats are up for grabs. Recent polls indicate the Democrats are leading, with a strong chance of securing a House majority.
A Democratic victory is expected to tighten restrictions on Trump administration policies, including the MASGA project.
Notably, the National Defense Authorization Act (NDAA) for fiscal year 2027, passed by the House in July, includes clauses limiting defense budget allocation for naval vessel or combat support ship construction at foreign shipyards. Democratic Representative Jared Golden spearheaded this initiative, citing the need to safeguard American shipbuilding jobs.
This stance clashes with the Trump administration’s policy of allowing some overseas construction. In August, the White House announced it would permit foreign shipbuilders investing in U.S. shipyards to build U.S. Navy vessels abroad. The initial plan targets two ships each in three categories: surface combatants, console tankers, and roll-on/roll-off vessels. This strategy aims to leverage overseas construction until U.S. shipyard capacity is fully developed.
Congressional disagreements persist. On October 29, Rep. Golden urged the Senate to maintain overseas naval construction restrictions during final NDAA negotiations. While some Senate committee discussions consider limited overseas construction, a Democratic majority could further complicate these negotiations.
The shipbuilding legislation aimed at revitalizing the U.S. merchant fleet is also under scrutiny. This bill seeks to reduce Chinese vessel dependence while expanding the U.S.-flagged fleet from 80 to 250 ships, establishing a strategic merchant fleet. Proposals include mandating 10% of Chinese imports be transported on U.S.-flagged ships and imposing punitive taxes on China-associated vessels.
While some shipbuilding legislation provisions were included in the House-passed NDAA in July, key elements of the strategic merchant fleet plan were omitted.
Professor Koo Gi-bo from Soongsil University’s Global Trade Department warns that the Democrats have strongly opposed overseas construction. Their victory could make it even harder to build U.S. naval vessels in South Korean shipyards.
An industry insider noted that even with Republican control of both chambers, related legislation stalled. Passage will be challenging regardless of which party holds the majority.
South Korea Is Essential to Rebuilding U.S. Naval Power … Seoul Must Take the Lead in Negotiations
Despite election uncertainties, the consensus is that the broad strokes of Korea-U.S. shipbuilding cooperation will endure. With U.S. shipbuilding competitiveness waning and China’s naval power surging, collaboration with allies like South Korea remains indispensable.
An industry representative stated that the imperative to strengthen U.S. naval power and revitalize the shipbuilding sector has been a constant, even under Democratic leadership. While specific cooperation details may shift post-election, the overarching strategy is likely to remain intact.
Indeed, during the Joe Biden administration in February 2024, then-Navy Secretary Carlos Del Toro visited South Korea, touring HD Hyundai Heavy Industries and Hanwha Ocean shipyards to discuss expanded cooperation. When Hanwha announced its U.S. shipyard acquisition in June that year, it was hailed as a significant boost to U.S. shipbuilding competitiveness.
Since the Trump era, Korea-U.S. shipbuilding cooperation has materialized through the MASGA project, spawning concrete initiatives. Notably, beyond regulations on overseas U.S. naval vessel construction, areas like shipbuilding and maintenance, repair, and overhaul (MRO) at domestic shipyards remain viable cooperation channels.
Hanwha recently secured a 269 million USD contract to build a medium landing ship (LSM) for the U.S. Navy at its American shipyard, with options for three additional vessels. HD Hyundai plans to establish HD Kiewit Shipbuilding with construction firm Kiewit, meeting the Trump administration’s local shipyard investment requirements.
Another industry insider emphasized that U.S. naval power maintenance and shipbuilding revival necessitate cooperation with allies like South Korea. While political interests may alter specific collaboration methods, Korea-U.S. shipbuilding cooperation is bound to continue.
Experts, anticipating ongoing Korea-U.S. shipbuilding cooperation, advise South Korea to proactively shape negotiation agendas. They stress the importance of expanding South Korean shipyard construction capacity until U.S. shipbuilding infrastructure and skilled labor are fully developed.
Professor Koo advised that rather than merely reacting to U.S. demands, it should preemptively address investment issues. For instance, it could negotiate to increase the number of vessels built in Korea.