Trump Signs Memorandum Allowing Foreign Shipbuilders to Construct Limited U.S. Vessels

President Donald Trump signed a national security memorandum on Thursday permitting foreign shipbuilders to construct up to two ships in their home country shipyards for delivery to the United States. The initiative aims to rebuild the U.S. Navy and the domestic shipbuilding industrial base by utilizing what the White House calls the Finland model. Under this approach, the U.S. will acquire vessels more rapidly from allied foreign shipyards before transferring production to the U.S. through foreign investment.

To qualify for this exemption, a foreign supplier must simultaneously build a new shipyard in the U.S. or assume ownership or a majority equity position in an existing U.S. shipyard. The foreign company must also hire and train American workers, license shipbuilding technologies to U.S. yards, and source components through U.S. supply chains. The policy applies to three ship classes: consolidated cargo replenishment tankers, roll on roll off military transport vessels, and surface combat vessels for convoy escort, surface warfare, and anti submarine warfare missions.

South Korean conglomerate Hanwha is positioned as a primary beneficiary of the move. Hanwha acquired Philly Shipyard in Philadelphia in December 2024 and has announced plans to invest 5 billion dollars to expand the facility. Additionally, Hanwha Defense USA has made a nonbinding offer to acquire Austal USA, which would provide the company with a naval construction base in Mobile, Alabama. This development follows a broader commitment from South Korea to invest 150 billion dollars in the U.S. shipbuilding sector as part of a 350 billion dollar investment pledge from last year.

The memorandum also directs the defense secretary to establish a fifth naval shipyard, the first in over 80 years, to increase repair capacity for aircraft carriers and submarines. Furthermore, a priority legislative proposal mentioned by the White House Office of Management and Budget would authorize the U.S. Navy to contract for two combat ships and two non combat auxiliary vessels in foreign shipyards.