China escalates US trade fight with some curbs on shipping

China sanctioned the US units of a South Korean shipping giant and threatened further retaliatory measures on the industry, the latest in a series of tit-for-tat moves as Beijing and Washington jockey for leverage before expected trade talks.

The sanctions, targeting five US units of Hanwha Ocean Co., helped fuel a slump in global equities on Tuesday as traders dialed back hopes for an easing of tensions between the world’s largest economies. Hanwha Ocean closed down 6.2 per cent, while shares of Chinese shipbuilders rallied. 

China’s moves escalate a long-standing dispute with the US over maritime dominance. Both sides have already slapped special port fees on each other’s vessels, while the US has rallied allies — especially South Korea — to help it revive a moribund American shipbuilding industry. The battle has implications for the global economy, as vessels are responsible for moving more than 80 per cent of international trade.

“This is a broadening and expansion of the ongoing trade conflict,” said Deborah Elms, head of trade policy at the Hinrich Foundation, a Singapore-based philanthropic organisation. “It’s no longer just about tariffs and export controls, but which firms have the ability to operate in which markets. If this continues, a lot more economic activities are at risk.” 

Shipping is just one point of contention in the China-US relationship that has kept global investors on edge in recent days. Beijing has tightened export controls on rare earths among other measures, while the US has expanded curbs on China’s access to chips and threatened the country with additional 100 per cent tariffs. 

Even as officials from both governments have emphasised they continue to talk, it’s unclear whether they’ll be able to hash out a truce ahead of a summit between Donald Trump and Xi Jinping. One risk for Xi is that China’s latest measures on rare earths and shipping may prompt countries like South Korea to side with the US in applying pressure on Beijing.

US Treasury Secretary Scott Bessent has accused Beijing of pointing “a bazooka at the supply chains and the industrial base of the entire free world,” and rallied America’s allies to unite with Washington in opposing the policy. 

Chinese officials have a chance to tamp down tensions this week. Vice Finance Minister Liao Min, a key member of Beijing’s trade negotiating team, is attending an annual huddle of global finance ministers in Washington, where he’s already met with members of Bessent’s team, according to a person with knowledge of the matter. Broader trade talks are expected in the coming weeks.

In its announcements on Tuesday, China said it was assessing the impact of the US Trade Representative’s Section 301 investigation into the nation’s maritime sector, and may roll out more responses. Hanwha Ocean’s subsidiaries assisted and supported investigative activities of the US government, thereby endangering China’s sovereignty, security and development interests, according to a commerce ministry statement. 

A Hanwha Ocean spokesperson said it is “aware of the announcement made by the Chinese government and is closely reviewing its potential business impact.”

Over the past decade, Chinese shipbuilders have outperformed their South Korean and Japanese counterparts to become the world’s top vessel makers, doing so while America’s industry was nearly non-existent. The Trump administration’s push to revive US shipbuilding offered South Korean players a perch to expand their influence, with Seoul pledging to commit $150 billion in expertise and investments to stimulate US ambitions in the sector.

In March, as Washington was deliberating on the final shape and form of the actions it would take against China’s shipping prowess, Hanwha Shipping submitted public comments to trade representative Jamieson Greer in support of the probe. 

China’s latest measures will put pressure on South Korea to choose between Beijing and Washington, according to Jung In Yun, chief executive officer at Fibonacci Asset Management Global Pte.

“The sanctions against Hanwha send a clear message from Beijing,” Yun added, noting if the Korean company continues to work with the US “it will have to sacrifice its Chinese business.”

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Published on October 14, 2025