The dominance of world shipbuilding capabilities is shifting towards the East. The United States, with its limited capabilities, plans to work together with its allies to design and build warships. However, this plan faces significant resistance domestically. Analysts warn that if the United States wants to narrow the gap in terms of fleet size compared to China, it has no choice but to outsource part of its shipbuilding operations to South Korea and Japan.
On May 31, the Hong Kong-based South China Morning Post reported, citing media reports from last month, that the U.S. submitted a budget for the next fiscal year that included a special fund of up to $1.85 billion. This fund was intended to study the feasibility of outsourcing the design and construction of frigates and destroyers.
USNI News states that this research will focus on exploring the feasibility of adopting or jointly developing advanced ship design conceptssuch as Japans Mogami-class and South Koreas Daegu-class frigates. This is aimed at alleviating the already strained situation of the U.S. Navys own shipbuilding production lines.
The South China Morning Post pointed out that the USs actions come at a time when it is striving to accelerate its naval construction efforts in order to narrow the gap with China. Currently, China has at least 350 military ships, making its naval fleet the largest in the world. In contrast, the US Navy currently has only 291 combat ships, which is far below the legal minimum of 355 ships required by law.
Some Korean analysts have warned that without leveraging the outsourcing capabilities of South Korea and Japan, the United States military shipbuilding industry will certainly be completely defeated in its competition with China. They even said that claiming that Chinas total shipbuilding capacity is 200 to 300 times that of the United States is by no means an exaggeration. Another Korean scholar believes that the laws enacted by the United States to protect its own shipyards have effectively turned the domestic shipbuilding industry into a situation where it operates like a frog in a well, resulting in a complete loss of competitiveness.
On July 31, 2025, HD Hyundai Heavy Industries in South Koreas Ulsan district reached an agreement with the US regarding trade negotiations. South Korea agreed to invest $350 billion (approximately 487 trillion Korean won) in the United States, and to reduce reciprocal tariffs from 25% to 15%. The local shipbuilding industry expressed hope that $150 billion of this investment would be used for shipbuilding cooperation. IC Photo
According to reports, due to insufficient domestic shipbuilding capacity, the U.S. Navy has frequently encountered problems such as delays in construction schedules, budget overruns, and labor shortages during its shipbuilding projects. As a result of these factors, the U.S. Navy was forced to cancel the construction plan for the Constellation-class frigates last November.
Troy Stangarone, a visiting senior researcher at the Korea-US Economic Research Institute (KEI), an American think tank, pointed out that the cancellation of the -class frigate project is a reflection of the various challenges faced by the United States defense procurement system.
He added that the project experienced too many design changes during implementation. Coupled with a severe shortage of labor, the project costs skyrocketed, and the project timeline was continuously delayed.
If the success of any cooperation with South Korea or Japan is to be ensured, the United States must first determine the final design plan. Whether it involves designs from allies or those developed by the United States itself, once a decision is made, it must be implemented without any changes.
Stangarone further believes that outsourcing the shipbuilding business to South Korea and Japan will bring real advantages to the U.S. Navy. Both countries have significant advantages in terms of shipbuilding capacity, allowing them to build warships at a faster pace and with lower costs. This will enable the United States to focus its production efforts on building more advanced and specialized ships.
Korean retired naval captain and senior researcher at the Korea Institute of Military Engineering (KIMA), Yoon Suk-joon, said that the void created by the cancellation of the Seoul-class frigate project can be filled by Korean and Japanese shipbuilders. However, if there is an increase in demand for large ships like the Trump-class battleships, it could lead to a reduction in the need for frigates manufactured abroad.
In fact, this plan to outsource naval shipbuilding operations faced resistance in the U.S. Congress. Members of Congress were concerned that this move could have negative effects on the countrys shipbuilding industry.
In a hearing held earlier this month before the House Armed Services Committee, attended by senior U.S. Navy officials, Rep. Jared Golden, a Democratic representative from Maine, pointed out that if Congress approves sending a signal of weak demand to the U.S. shipbuilding industry, American shipbuilders will be forced to lay off employees.
Republican U.S. Representative Derrick Van Orden from Wisconsin agreed with this statement. He even insisted, I firmly believe that our American citizens, whether they are men or women, whether they are skilled workers or craftsmen, are among the best in the world.
From Texas, Republican Federal Representative Morgan Luttrell expressed concerns about whether these ships, built by foreign countries, will use key structural materials manufactured in the United States.
Previously, laws enacted by the United States to protect its own shipbuilders have now become obstacles that hinder the recovery of the countrys shipbuilding capabilities.
The Jones Act, passed in 1920, requires that all goods transported between American ports must be carried by ships built in the United States. The Byrnes-Tollefson Amendment, effective since 1965, further mandates that ships and their major components belonging to the U.S. Navy and Coast Guard must be built within the United States.
Seoul Universitys Professor of Shipbuilding and Ocean Engineering, Woo Jong-hun, pointed out that although the United States is committed to improving its shipbuilding capabilities through cooperation with allies, due to strong resistance to outsourcing the manufacturing of key strategic assets overseas, coupled with the risk of losing votes for politicians, significant progress has been made in this area so far.
Its always the navy, that is, the demand side, that expresses this sense of crisis. However, Congress and those politicians who are involved in legislation to promote orders from allies hold completely different views. This seems to be the crux of the conflict, he said.
April 20, 2026, at Jiangsu Jingjiang New Yangtze Shipbuilding Co., Ltd.s factory site, several large ships were being constructed intensively. IC Photo
Shangzhi Universitys professor of military science, Choi Gi-il, stated that the industrial ecosystem for the construction and maintenance of American warships has collapsed. As a result, South Korea and Japan are the only countries capable of filling this void as.
He believes that the laws enacted by the United States to protect its own shipbuilders have effectively turned the domestic shipbuilding industry into a frog in a well, thereby rendering it unable to compete.
Therefore, it seems that the U.S. Congress and other relevant parties are concerned that, in their efforts to revitalize their own shipbuilding industry ecosystems, excessive reliance on South Korea and Japan could lead to the complete collapse of those ecosystems themselves, analyzed Choi Ki-jae.
To circumvent the protective barriers imposed by the United States on the shipbuilding industry, Hanwha Ocean, one of South Koreas leading shipbuilding companies, acquired Philly Shipyard in December 2024. This move allowed the company to establish a manufacturing base in the United States, enabling it to undertake contracts for the construction, maintenance, and repair of both civilian and military vessels.
Stangarone said that the opposition within the U.S. Congress largely stemmed from pressure from voters in regions with shipbuilding industries. He pointed out that the domestic industrial capabilities of the United States clearly cannot carry out this task. During the transition phase of rebuilding domestic production capacity, reliance on other sources of production is necessary.
