Shipbuilding cooperation key bargaining chip in tariff negotiations with U.S.: industry minister

Shipbuilding cooperation may be a “very important” bargaining chip for South Korea’s tariff negotiations with the United States, the industry minister said Wednesday, amid growing concerns the U.S.’ sweeping tariffs may seriously impact local industries and the economy.

“The United States’ competitiveness in the shipbuilding industry has continued to decline since World War II, so Washington has high expectations for South Korea’s shipbuilding and manufacturing capabilities,” Industry Minister Ahn Duk-geun said in a meeting of the parliamentary trade committee.

“The shipbuilding sector is a very important negotiating card for us because the Trump administration has keen interest in cooperation between South Korea and the U.S. in the shipbuilding sector,” he said.

“I think we give very high credibility to the U.S. as we also have a strong alliance in terms of defense.”

Ahn’s remarks came as the U.S. reciprocal tariffs took effect Wednesday, sparking concerns over its impact on the South Korean economy, which is heavily reliant on exports.

Washington imposed 25 percent reciprocal duties on South Korea, while levying 24 percent tariffs on Japan, 32 percent on Taiwan, 20 percent on the European Union, 49 percent on Cambodia and 46 percent on Vietnam, to name a few.

Ahn said the government has been discussing expanding cooperation in the shipbuilding industry with the U.S., noting that Washington is interested in maintenance, repair and overhaul (MRO) projects for not only non-combat vessels but also battleships.

On the general response strategy to U.S. tariffs, Ahn said South Korea is weighing on negotiations, unlike China and the European Union’s plans for retaliatory measures.

“South Korea could self-impose greater damage if it responds with retaliatory tariffs because the country has a heavy dependence on trade,” Ahn explained, vowing to work to “swiftly” negotiate with the U.S.

“The government has communicated with the Trump administrations numerous times, but it seems like (our position) has not been fully reflected in the recently announced reciprocal tariffs,” he said.

“However, I believe our past communications will serve as a valuable asset in future negotiations.”

On skepticism over the effectiveness of the Korea-U.S. Free Trade Agreement (FTA), Ahn said South Korea should still maintain the trade pact, noting it has allowed the country to face a lower tariff rate than Japan and the EU.

For instance, South Korea only has to pay 25 percent tariffs on its auto exports to the U.S. since it had a zero tariff base under its bilateral FTA with the U.S., while Japan and the EU, both lacking a bilateral free trade deal with the U.S., both have to face 27.5 percent tariffs, he explained.

Ahn said Washington has been giving “considerably positive” signals after South Korean acting President Han Duck-soo held phone talks with Trump on Tuesday, noting he himself plans to pay another visit to the U.S. soon.

Ahn visited Washington twice over the past two months for tariff negotiations with the U.S.

“Han and Trump discussed addressing the trade balance issue through energy and shipbuilding cooperation during their phone call yesterday,” Ahn said.

“On the liquefied natural gas (LNG) agenda, we have yet to give confirmation we will participate in the project, so we will have to discuss with the U.S. on the economic feasibility of the project and how we can collaborate,” he added.

Trump earlier highlighted South Korea’s potential participation in the Alaska LNG project, which aims to produce 20 million tons of LNG annually and start exporting it, primarily to Asia, by as early as 2029.

“Looking back on our country’s economic development process, we have experienced many ordeals and may have lost in a few battles, but we never lost a war,” Ahn said.

“We will win this time as well. It is proven by history.”