China Strikes Back: Hanwha Sanctions Deepen US–China Maritime Trade War Ahead of Trump–Xi Summit

China escalated its sea trade row with America by penalizing five US subsidiaries of South Korean shipbuilder Hanwha Ocean. It was a response to Washington's Section 301 probe of China's dominance in global shipbuilding and Hanwha's cooperation with US regulators.

The sanctioned individuals are Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC, and HS USA Holdings Corp. China's Commerce Ministry explained that threats to sovereignty and national security were the reasons for imposing sanctions.

Simultaneously, both nations levied reciprocal port fees on vessels of either nation, further pressuring global shipping activities. Chinese shipyards saw a stock surge, while Hanwha Ocean stocks crashed. The sanctions also jeopardize Hanwha's $5 billion investment in US shipyard infrastructure and its contract with the US Navy.

The broader trade war now also extends past chips and tariffs, into deeper supply chain segments like shipping and rare earths. More than 80% of global trade is dependent on shipping, making the stakes far-reaching. Trump administration attempts to revive American shipbuilding have also drawn South Korea towards Washington, and Seoul may be forced to make a decision.

As tensions rise, global investors wait with bated breath before a potential summit between Xi Jinping and Donald Trump. China issued threats of additional retaliation, and US officials hold Beijing responsible for putting global supply chains at risk. The fate of upcoming trade talks could recast coalitions and redefine mastery of the world's sea lanes.