China’s Commerce Ministry on the date of 2025-10-14 banned Chinese companies from dealings with five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, escalating tensions around global shipbuilding and maritime trade.

The sanctioned entities were named as Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC and HS USA Holdings Corp. The ministry connected the action to a U.S. investigation into China’s role in the shipbuilding sector and said Washington’s probe threatened China’s national security and shipping industry. It also said Hanwha had been involved in that investigation.

The U.S. Trade Representative opened the Section 301 investigation in April 2024. According to the Associated Press, the inquiry concluded that China’s position in shipbuilding placed a burden on U.S. businesses. Beijing’s response widened the dispute beyond the United States by targeting units connected to a South Korean company with U.S. operations and investments.

Hanwha Ocean has become part of closer shipbuilding cooperation between South Korea and the United States. In late 2024, it acquired Philly Shipyard in Pennsylvania for $100 million. In August, the company announced plans to invest $5 billion in new docks and quays to support efforts to restore competitive shipbuilding capacity in the United States. Hanwha Ocean also secured U.S. Navy contracts last year for maintenance, repair and overhaul work on naval vessels.

In a statement provided by email to the AP, Hanwha Ocean said it was aware of the Chinese government’s announcement and was reviewing the possible business impact. Its shares in South Korea fell as much as more than 8% during Tuesday trading and closed 5.8% lower.

South Korea’s Foreign Ministry told the AP that Seoul was assessing the potential effect of the sanctions on the Hanwha companies and related industrial sectors. The ministry said it would communicate with relevant ministries, industry representatives and China to limit damage from the measures.

The sanctions were announced amid a broader deterioration in trade relations between Beijing and Washington. Both countries imposed new port fees on each other’s vessels that took effect on Tuesday. China said its fees would cover ships owned by U.S. companies, entities or individuals; ships operated by U.S. entities, including those with a U.S. stake of 25% or more; U.S.-flagged vessels; and ships built in the United States. The AP reported that the Chinese structure mirrored many aspects of U.S. port fees on Chinese ships.

The confrontation comes as the United States seeks to rebuild domestic shipbuilding. U.S. businesses account for 2.9% of world fleet ownership by capacity and 0.1% of global shipbuilding tonnage, while China accounts for more than half of new shipbuilding. South Korea represents about 30%, and Japan just over one-tenth. Hanwha Ocean said in May that it was withdrawing from a joint venture in China.