South Korea Offers "Priority" Shipyard Slots to Ward Off Trump Tariffs
The governments of South Korea and Japan plan to use maritime trade as a bargaining chip to avoid the unfortunate fates of Canada and Mexico, the first two U.S. allies hit by the White House's tariff proposals. Both Japan and South Korea have shown interest in a big-ticket LNG export project from the state of Alaska, and Korea is also pitching its shipbuilding capabilities as a way to build up American maritime power.
South Korea's trade and industry minister, Ahn Duk-Geun, met last week with U.S. Commerce Secretary Howard Lutnick to talk about cooperation on shipbuilding and tech industry development. As an outcome of the discussion, Ahn's office said that Korea will be setting up a shipbuilding cooperation task force drawing on multiple government agencies, including foreign affairs and defense. The U.S. Department of Commerce will set up a similar working group.
Ahn told Korean media that the Trump administration is interested in accessing South Korea's sophisticated naval shipbuilding capabilities. The U.S. Navy is struggling to overcome cost and schedule issues with almost all of its major shipbuilding programs, in part because of supply chain and labor recruitment issues; South Korea has the world's second-biggest shipbuilding industrial base, and though it has labor issues of its own, it does have a much larger pool of skilled tradesmen to draw upon. One of its yards, Hyundai Heavy Industries, has built Aegis-equipped destroyers.
According to Business Korea, Ahn offered priority access to newbuild slots at Korean shipyards for package orders of warships, tankers and icebreakers - in return for guaranteed safety from U.S. tariffs. Those slots are hard to come by, as the orderbooks at Korea's Big Three yards are booked through 2027-8 in a hot commercial newbuild market.
"At this point we don’t know how the Trump administration will play out its trade policies in the long term. So what’s most urgent now is to secure a communication channel and keep negotiating in favor of our firms," Ahn said.
The other big offer on the table is the prospect of Asian investment in the long-stalled Alaska LNG project, a proposed pipeline and export terminal that would commercialize vast quantities of natural gas from the remote North Slope. The terminal near Anchorage would liquefy up to 20 million tonnes per annum (mtpa) of LNG for export, but at an eye-watering construction cost of $44 billion.
"Currently, our country's energy supply is heavily skewed towards the Middle East, and imports of U.S. energy are important for energy security, so we are actively reviewing this," Ahn said. "We are also considering ways for private businesses to diversify energy import channels."
Japan is also in the running for a role in Alaska LNG, which had been all but defunct until the new flurry of diplomatic activity. In February, President Donald Trump described an agreement with Japan to offtake "historic" amounts of gas from the as-yet-unbuilt terminal.
"The administration is working on a gigantic natural gas pipeline in Alaska, among the largest in the world, where Japan, South Korea and other nations want to be our partner with investment of trillions of dollars each," President Donald Trump said in his recent joint session address.