US President Donald Trump’s national security memorandum temporarily permits foreign shipbuilders with substantial, long-term investments in American shipyards to build up to two vessels overseas. The decision could signal a historic shift in US maritime strategy.
The policy reflects a demanding reality that underpins US defense strategy: America must work with capable allies to expand near-term production and leverage their capital and expertise to restore its defense-industrial strength.
For decades, however, two legal regimes have constrained such cooperation. While serving legitimate security purposes, they have also insulated domestic shipbuilding from global competition and limited access to allied capacity. The Jones Act requires that vessels carrying goods between US ports be built, owned, flagged and crewed in the United States. Title 10, Section 8679 prohibits the construction of navy vessels and major hull components abroad, though it permits a presidential national security waiver.
Protection, without sufficient competition, predictable demand and continuous modernization, has contributed to today’s loss of scale and cost competitiveness. Trump’s waiver is therefore a significant step toward an integrated allied shipbuilding strategy.
American shipyards still produce sophisticated warships, but the Government Accountability Office reported this year that none of the warship builders was positioned to meet delivery goals. The US retains world-class technology, yet its industrial base lacks scale, speed and affordability.
That shortfall is a strategic vulnerability. China has the world’s largest shipbuilding capacity and is rapidly expanding its navy. Indo-Pacific deterrence requires not only advanced platforms but also the capacity to build, maintain and replace them. South Korea offers perhaps the most readily available large-scale allied solution.
Korea’s Aegis destroyer program provides compelling evidence. HD Hyundai built the Sejong the Great, a 10,000-ton destroyer at full load, integrating Lockheed Martin’s Aegis Combat System with Korean and allied systems. The ship was delivered on time and on budget for about $1 billion. A US Flight III Arleigh Burke-class destroyer costs about $2.7 billion.
This is not a like-for-like comparison: Configurations, radar generations, procurement periods and accounting methods vary. Nevertheless, it demonstrates Korea’s ability to integrate US technology with domestic systems and to build efficiently at a competitive cost.
President Trump has opened the legal door to cooperation that extends beyond maintenance, repair and overhaul, or MRO, for auxiliary vessels to the potential construction of US warships — including, eventually, Aegis-equipped warships. Yet political authorization does not automatically lead to a contract. Korea must clear three hurdles.
First, Korean shipbuilders must understand US defense procurement requirements.
After years of working with businesses involved in US Defense procurement, I know that technical capability alone is insufficient to produce a qualified proposal. Korean companies must understand US Defense acquisition regulations, prepare compliant proposals and meet federal contracting requirements.
They must also comply with US controls and regulations on defense technology and ensure their information systems meet Pentagon cybersecurity standards and other compliance requirements. These obligations must be incorporated into corporate procedures, proposals and supply chains before bidding — not after contract award.
Second, both governments must establish a framework for protecting classified information.
Political approval alone does not grant Korean engineers access to sensitive or classified US ship designs. A Korean-owned US subsidiary would need facility clearance and government approval to mitigate foreign ownership. A shipyard in Korea would require separate security verification, export authorization and contract-specific safeguards.
Obtaining these approvals requires careful planning. Depending on the security level and arrangement, the US subsidiary may also be subject to governance by cleared US citizens and to strict safeguards that prevent unauthorized foreign access to or control over classified work. Without this security framework, the Korean company would be unable to obtain the technical information needed to prepare a credible proposal.
Third, Washington and Seoul should finalize a memorandum of understanding on Reciprocal Defense Procurement.
On Feb. 23, 2024, the US Defense Department published a Federal Register notice stating that it was considering an RDP agreement with Korea, though the process remains incomplete. For certain procurements not otherwise exempt under applicable trade agreements, offers from a Korean company (a non-qualifying country) may be subject to a 50 percent penalty during bid evaluation. This is not a tariff, but it can render a competitive offer commercially unviable.
An RDP memorandum would provide a reliable basis for reciprocal market access and industrial cooperation. It would not override restrictions on foreign shipbuilding, technology transfers, classified information or domestic sourcing. However, it would make Korean participation more systematic and less dependent on exceptional waivers.
With these hurdles cleared, Seoul and Washington need to develop a sustainable model for rebuilding the US Navy. Hanwha’s acquisition of Philly Shipyard illustrates this model: build initial vessels in Korea to meet urgent requirements, using Korean capital, production methods and workforce training to strengthen US industry as part of the broader Make American Shipbuilding Great Again initiative.
If Seoul approaches this opportunity with full regulatory, security and industrial readiness — and both governments establish a reciprocal framework — the outcome could extend beyond two vessels. Korea could become a vital partner in closing America’s naval shipbuilding capacity gap and in implementing US strategy across the Indo-Pacific, including the Korean Peninsula.
This cooperation could elevate the relationship from a traditional security partnership to an integrated industrial alliance capable of building the naval power needed to deter conflict and sustain regional stability.
Man-Ki Kim
Man-Ki Kim is a professor at the KAIST Graduate School of Future Strategy, specializing in global public procurement, defense acquisition innovation and global strategic trends. He also serves as a senior adviser at Yoon & Yang LLC. The views expressed here are the writer’s own. — Ed.
khnews@heraldcorp.com