How Trump reshaped Korea's market landscape: Shipbuilding and defense coast as EVs lose power

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How Trump reshaped Korea's market landscape: Shipbuilding and defense coast as EVs lose power

Published: 25 Jun. 2025, 16:40 Updated: 09 Jul. 2025, 12:34

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

A K9 self-propelled howitzer made by Hanwha Aerospace is seen tearing through a desert in the Middle East on Feb. 2. [HANWHA AEROSPACE]

[BEHIND THE NUMBERS]

The Korean stock market is experiencing unusually volatile swings under U.S. President Donald Trump’s return to power, with a seismic shift even disrupting the once-unshakable top five.

With Korea's total market capitalization climbing almost 20 percent to some 2.46 quadrillion won ($1.8 trillion) over the past six months, the U.S. president's open call for cooperation in the shipbuilding and defense sectors boosted the major players of the respective fields.

While a defense firm has nearly tripled its market cap — breaking into the top five from the 20s — others have lost over 20 trillion won in value solely on the strength of Trump’s sectoral whims.

Although recent developments under the new Lee Jae Myung administration have introduced some fluctuations, rising stocks continue their steady climb, while declining ones show no clear bottom in sight.

‘We need Korea’s help’: Shipbuilding sails through the ceiling

Arguably, the most radical shift has been seen in Korea’s shipbuilding sector, particularly after Trump’s first phone call with then-President Yoon Suk Yeol, where he explicitly expressed a desire to work with Korean shipbuilders. He later reinforced this stance by stating that the United States may have to “buy some ships from other countries we’re close to and that do great jobs with ships.”

Prior to the Trump boost, three major shipbuilders — HD Hyundai Heavy Industries, Samsung Heavy Industries and Hanwha Ocean — were relative underperformers. Just two years ago, HD Hyundai's stock was trading at barely a quarter of its current value of 130,000 won per share, dragged down by stiff competition from price-cutting Chinese rivals.

The market cap of HD Hyundai Heavy Industries, the biggest shipbuilder in Korea, surged 144.6 percent to 39.3 trillion won on June 20 compared to Nov. 6, a day before Trump was declared the winner, when the firm was the 26th largest company in Korea’s stock market. It has risen to ninth.

Korea Shipbuilding & Offshore Engineering’s market cap soared 102 percent to 26.58 trillion won, with its ranking moving to 18th place from 32nd during the same period.

Hanwha Ocean, which was not among Korea’s top 50 companies by market cap as of Nov. 6, made it to 16th at 27.15 trillion won, while Samsung Heavy Industries also broke into the list at 37th with a market cap of 14.85 trillion won.

The boost is backed by Trump’s recent hardline stance against China, exemplified by an executive order he signed in April to impose a fee of $18 per ton, or $120 per container, for any Chinese-built ships arriving in the United States, effective as of Oct. 14. Under the rate, a typical large container ship with a deadweight tonnage of around 100,000 tons would incur roughly $1.8 million in additional charges per call under the new rule. The price is scheduled to rise to $33 per ton by 2028.

A liquefied natural gas carrier built and delivered by HD Hyundai Heavy Industries in 2024 [HD HYUNDAI HEAVY INDUSTRIES]

Amid the rapid rise of China's shipbuilding capabilities, the U.S. shipbuilding industry has steadily lost ground since the early 2000s. Now, only 21 shipyards remain in operation nationwide, collectively producing fewer than five commercial vessels each year. In terms of naval strength, the U.S. fleet stands at 219 warships, trailing behind China’s 234, posing a threat to maritime security.

“ExxonMobil’s recent cancellation of an order with a Chinese shipyard can be interpreted as a sign that some clients are beginning to recognize the risks associated with Chinese shipbuilders,” said economic security researcher Hong Jin-hee from Korea Institute for International Economic Policy.

“With the United States intensifying its sanctions on China, global demand is expected to shift increasingly toward Korean shipbuilders,” Hong noted. “Strategic collaboration in areas such as maintenance, repair, and overhaul [MRO], vessel modernization, and advanced smart ship technologies could further enhance the competitiveness of Korea’s shipbuilding sector while providing a meaningful opportunity to deepen Korea–U.S. maritime industrial cooperation.”

Hanwha Ocean in December completed the acquisition of Philadelphia-based Philly Shipyard as well as a full stake in Australia-based Austal, rapidly expanding its strategic footprint in Korea-U.S. maritime cooperation.

In August of last year, Hanwha Ocean became the first Korean shipbuilder to win an MRO contract for a U.S. Navy logistics support vessel, the USNS Wally Schirra, and successfully delivered, reporting very high satisfaction.

HD Hyundai is currently in discussions with Huntington Ingalls Industries, the largest military shipbuilder in the United States, on MRO cooperation, as Trump reaffirmed his commitment to approving a $1 trillion defense budget for the U.S. Navy.

HD Hyundai's Ulsan shipyard [HD HYUNDAI]

‘NATO must pay more’: Korean defense set for offense

Against the backdrop of the ongoing Russia-Ukraine war and the recent conflict in the Middle East, it is Hanwha Aerospace, Korea’s largest defense company, that has recorded the most dramatic market cap growth over the seven months aligned with Trump’s victory.

Hanwha’s market cap surged by 151.2 percent to 44.36 trillion won from Nov. 6 of last year to June 20, which caused its rank to move up to fifth from 21st.

The surge was largely driven by Trump’s remarks urging NATO members to increase defense spending to 5 percent of their GDP from the current 2 percent, along with the war in Ukraine and heightened tensions between Israel and regional neighbors.

"It's common sense, right?" the president told reporters in March, adding that “If they don't pay, I'm not going to defend them. No, I'm not going to defend them."

Trump also said Friday the rise in defense spending doesn’t apply to the United States, whose spending currently sits at 3.4 percent. NATO data estimates that only 23 members besides the United States met the 2 percent target last year.

Other Korean defense firms also saw sharp gains, with Hyundai Rotem, which was not in the top 50, moving up to 21st place. LIG Nex1 also broke into the list at 41st as of June 20.

“A proposed increase to 5 percent would more than double their defense budgets as a 1 percentage point increase in NATO members’ defense spending is estimated to add approximately $500 billion in additional military expenditures,” Hana Securities wrote in a recent report.

“As NATO countries look to ramp up the procurement of new weapons systems, the shift is expected to open new export opportunities for Korea’s defense companies to Europe."

Employees make the Ioniq 5 SUV at the Hyundai Motor Group Metaplant America, which officially opened in Bryan County, Georgia, on March 26. [HYUNDAI MOTOR]

‘Electric car lunacy’ to ‘rot in hell’

With Trump’s win also came a harsh reality for battery and automakers, caught in the crossfire of tariffs and his serious skepticism of EVs. Trump has been a vociferous opponent of Joe Biden-backed EV policies from even before he took office, saying in a Christmas message to his supporters that "All Electric Car Lunacy, and so much more, are looking to destroy our once great USA. MAY THEY ROT IN HELL" on his social media platform, Truth Social, in 2023.

The profitability of battery manufacturers is closely tied to the fortunes of EV makers, who have been severely impacted by the White House's 25 percent tariffs on cars. Hyundai and Kia, for instance, are major clients of LG Energy Solution and SK On, while LG Energy Solution is a supplier to Tesla.

LG Energy Solution, which was the third-largest company in Korea in terms of market cap, inched down to fourth as its value crashed more than 20 trillion won over the seven months.

Samsung SDI, which was valued at 20.53 trillion won on Nov. 6, sank to 14.21 trillion won during the same period, falling to 39th from 18th in the ranking.

Once ranked 11th by market cap, Posco Holdings, a key player in Korea’s battery materials sector, has slipped to 23rd amid shifting investor sentiment and sectoral headwinds.

“Trump has vowed to eliminate a $7,500 EV tax credit, which will inevitably hurt automakers and, by extension, parts suppliers like us who are deeply tied to their production volumes,” said a source in the local battery industry.

Samsung SDI's cylindrical batteries are displayed at its booth at InterBattery 2025 at Coex, southern Seoul, on March 5. [YONHAP]

Korean automakers like Hyundai and Kia are already grappling with the potential fallout from Trump’s 25 percent tariff on imported vehicles, as around 65 percent of their cars sold in the U.S. market are not made there.

Between November 6 and June 20, Hyundai Motor slipped one notch in the market cap ranking, from fifth to sixth. Kia declined from seventh to 10th, and parts company Hyundai Mobis retreated from 13th to 17th, reflecting broader headwinds facing Korea’s auto sector.

The picture is even bleaker for GM Korea, which exports 90 percent of its production output from Korea. The company recently decided to sell off its service centers in Korea and the idle lands at its facilities. Though the company did not confirm that the act is intended to trim its business in Korea, speculation on a possible exit has grown, since 85 percent of its exports are for the U.S. market.

The outlook is deteriorating further as Trump has signaled the possibility of “going up with the tariff in the not-too-distant future,” on June 12.

Korea’s Ministry of Trade, Industry and Energy on June 12 launched a task force headed by new Trade Minister Yeo Han-koo, to formulate a concrete negotiation package ahead of the July 8 deadline.

“Korea and Japan must cooperate to formally request a tariff exemption from the United States, especially as both nations depend heavily on U.S.-bound exports, and they face comparable risks under the current trade environment,” Yeo told the Korea JoongAng Daily.

BY SARAH CHEA [[email protected]]