Beijing’s recent sanctions against Hanwha Ocean’s U.S.-linked affiliates mark a significant escalation in the U.S.-China trade war, transforming the global oceans into a new battlefield for economic and geopolitical dominance. This strategic move, seen by analysts as a “shipping cold war,” challenges Washington’s maritime ambitions and forces allies to weigh their loyalties.
The global stage is witnessing a dramatic new act in the ongoing rivalry between the United States and China. This time, the battleground is the high seas, with Beijing firing a “salvo” not through semiconductors or soybeans, but through ships. China’s recent sanctions against five U.S.-linked affiliates of South Korean shipbuilder Hanwha Ocean, announced on October 14, 2025, are more than just punitive measures; they represent a calculated geopolitical maneuver in what many are calling a “shipping cold war.”
This move coincided with the U.S. and China beginning to charge additional port fees targeting each other’s vessels, ahead of an expected meeting between U.S. President Donald Trump and Chinese leader Xi Jinping in late October. The sanctions explicitly banned transactions and cooperation with Hanwha Ocean’s U.S.-linked affiliates, citing security risks stemming from their involvement in the U.S. government’s “relevant investigative activities,” without elaborating on the suspected specifics, as reported by Reuters.
The Geopolitical Undercurrent: Washington’s Maritime Gambit and Beijing’s Counterpunch
At the core of this escalation lies Washington’s Section 301 investigation, launched in April 2025, into China’s dominance in shipping, logistics, and shipbuilding. U.S. officials argue that Beijing’s extensive subsidies and state-backed financing have distorted global competition. However, the political motivations are unmistakable: to revitalize America’s struggling shipbuilding industry and to curb China’s burgeoning maritime power. As Mihir Torsekar of the Coalition for a Prosperous America noted to The New York Times, “anything we can do to chip away at the disparity in shipbuilding that exists between the United States and China is to our benefit.”
Hanwha Ocean, a major global shipbuilder and South Korea’s largest defense shipbuilder, found itself in the crosshairs because its U.S. subsidiaries were accused of cooperating with this investigation. This was perceived in Beijing as an alignment with Washington’s containment strategy. China’s response was swift and precise, imposing restrictive measures on Hanwha’s Chinese operations, suspending procurement cooperation, and freezing pending maritime-related licenses. “China just weaponized shipbuilding,” said Kun Cao, deputy chief executive at consulting firm Reddal, highlighting Beijing’s intent to target “third-country firms that help Washington counter China’s maritime dominance,” according to The Associated Press.
These sanctions carry significant symbolic weight, signaling that China will not tolerate the weaponization of maritime law, particularly by companies that benefit indirectly from China’s own global supply chains. It serves as a calibrated warning: Beijing is not just defending its interests but actively shaping the new rules of engagement.
Industrial Fault Lines: Hanwha’s Exposure and the Shifting Center of Shipbuilding Gravity
The sanctioning of Hanwha Ocean sends ripples across the entire “maritime triangle” of China, Japan, and South Korea, which collectively control over 90% of global shipbuilding output. Hanwha’s extensive portfolio, including LNG carriers, naval vessels, and advanced offshore platforms, relies heavily on Chinese steel, electronics, and port logistics. By cutting Hanwha out of its supply ecosystem, Beijing effectively raises the cost of compliance with U.S. policy for every Asian shipbuilder.
Analysts like Kang Kyung-tae of Korea Investment & Securities pointed out that the immediate direct impact on the sanctioned Hanwha affiliates is minimal as they have no business connections with China. Hanwha’s Philly Shipyard, for instance, builds ships for the U.S. market, adhering to the Jones Act, and sourcing steel from the U.S., Canada, and Mexico. However, the broader concern among investors is that China might expand sanctions to other South Korean shipbuilders cooperating with the U.S.
South Korea has pledged up to $150 billion to aid the U.S. in reviving its shipbuilding industry, particularly for warships. Despite this, analysts believe China is unlikely to expand sanctions significantly, mainly due to its own reliance on South Korea’s shipbuilding industry for steel exports and engine imports. As Lee Jini of Daeshin Securities explained, “South Korean shipbuilding industry purchases some Chinese steel plates, about 20-30% of the total… if sanctions are expanded, the impact to Chinese steel makers will be no less than that on Korean shipbuilders.”
The sanctions accelerate Asia’s maritime realignment around China, mirroring the semiconductor sanctions saga where allies are pushed to choose sides. This predicament highlights the growing discomfort of middle powers caught between America’s strategic coercion and China’s industrial gravity.
China’s Legal Counteroffensive and the Seas of Retaliation
The sanctions on Hanwha are part of Beijing’s broader legal and institutional rearmament. In September 2025, China’s State Council amended its regulations on international maritime transport, granting it the power to take “necessary countermeasures” against countries or regions that discriminate against its shipping or shipbuilding interests. This legislative move explicitly authorizes the government to impose special port fees, restrict port entry, or suspend data access for foreign operators engaged in discriminatory practices.
This is a legal codification of maritime reciprocity, creating a counter-sanction rulebook that mirrors Washington’s Section 301 arsenal. For decades, the maritime order was largely anchored by Western-led norms of free navigation and open competition. Now, China is asserting its right to defend these principles through symmetrical retaliation, a tectonic shift where the defender of globalization adopts protectionist tools to safeguard its perceived interests.
The “tit-for-tat symmetry locks both economies into a spiral of maritime taxation, risking distortions in global freight flows,” as observed by Athens-based Xclusiv Shipbrokers. This sentiment underscores the potential for widespread disruption in an industry that moves over 80% of global trade.
The Strategic Chessboard: Energy, Logistics, and Ship Finance
Beyond legal maneuvers, the Hanwha episode exposes a deeper realignment in global maritime finance and logistics. While the U.S. is weaponizing trade law, China is weaponizing capital. Chinese banks like ICBC and Bank of China are expanding project financing for LNG carriers, offshore platforms, and port terminals across the Middle East and Africa, filling a funding void left by Western lenders retreating due to ESG and compliance risks. This creates a two-tier maritime system: one driven by American sanctions, the other by Chinese credit and infrastructure networks.
Beijing’s actions against Hanwha also signal to Seoul that participation in Washington’s containment strategy comes with tangible costs. For South Korea’s shipbuilding sector, already facing labor shortages and rising material prices, losing access to China’s logistical ecosystem could severely impact competitiveness. Chinese companies like CSSC, COSCO, and CMES are simultaneously accelerating their pivot towards green and digital shipbuilding, backed by state funding for ammonia-fueled vessels and autonomous navigation systems.
Implications for Global Industry: From Shipyards to Chemical Supply Chains
The significance of these sanctions extends far beyond the shipyards. The maritime chain is intricately linked to the chemical chain. Every LNG tanker, container vessel, and port terminal relies on coatings, catalysts, lubricants, and advanced polymer composites—many supplied by China’s chemical exporters. The U.S. port fees and China’s countermeasures could distort the flow of chemical intermediates and marine materials, reshaping trade routes and logistics cost structures.
For Chinese suppliers of marine paints, sealants, and fuel additives, this could necessitate diversifying export markets and developing localized production in other regions. Concurrently, China’s push for maritime digitalization, including blockchain-based cargo traceability and AI port scheduling, aims to enhance efficiency and reduce dependency on Western-controlled logistics networks. Beijing’s retaliation against Hanwha is thus not merely punitive but a constructive move to integrate its domestic supply chain, bridging chemicals, energy, and shipbuilding into a unified industrial ecosystem.
The Bigger Picture: Between Decoupling and Realignment
The Hanwha episode is pivotal because it embodies the broader transition from globalization to bloc-ization. Washington’s Section 301 actions seek to decouple industrial value chains, while Beijing’s countermeasures aim to rewire them under new rules of reciprocity and resilience. This contest is not solely about tariffs or shipyards; it is about who defines the operating logic of 21st-century globalization. Will maritime commerce continue under U.S.-led norms of open competition, or will it shift toward a more state-coordinated, security-driven framework anchored in Asia?
For multinational suppliers, from chemical intermediates to advanced materials, the message is unambiguous: neutrality is no longer an option. Companies embedded in trans-Pacific value chains must now navigate a world where every port call, every financing deal, and every procurement contract carries significant geopolitical risk. As one Chinese industry insider put it, “the U.S. collects fees; China builds ships. One fuels bureaucracy, the other fuels the future.”
A new maritime order is emerging from the waves, and China’s sanctions on Hanwha Ocean mark a definitive moment where Beijing is not just reacting but actively rewriting the rules of maritime governance itself. The world’s ports are now stages in a grand strategic drama, where every vessel carries not only goods but also ideology, and Beijing intends to write the new script for navigation.
