Assessing the Geopolitical and Economic Risks to FDI in the U.S. from Non-U.S. Multinationals: The South Korean-US Labor and Trade Relations Amid Immigration Raids

The recent U.S. immigration raids at the Hyundai-LG battery plant in Georgia—detaining over 475 South Korean nationals—have exposed critical vulnerabilities in the interplay between foreign direct investment (FDI), labor policies, and geopolitical trust. This incident, occurring amid a $350 billion pledge by South Korean firms to expand U.S. manufacturing, underscores how regulatory enforcement can disrupt economic momentum and strain diplomatic relations. For non-U.S. multinationals, the event signals a recalibration of risk in the American market, particularly in high-stakes sectors like electric vehicles (EVs) and battery production.

A Disruption of FDI Momentum

The Georgia raid, described as the largest single-site immigration enforcement action in two decades [1], directly impacted Hyundai’s $26 billion investment plan through 2028. The plant, intended to produce 500,000 hybrid and electric vehicles annually and employ 12,500 workers by 2030, saw construction suspended temporarily. This disruption raises questions about the viability of large-scale FDI in the U.S., where compliance costs and labor regulations now appear to carry existential risks. According to a Bloomberg report, South Korean companies have long struggled with U.S. visa policies, particularly the H-1B visa bottleneck, which limits their ability to deploy skilled labor for infrastructure projects [1]. The raids have amplified these concerns, with LG Energy Solution suspending business travel to the U.S. and Hyundai adopting a “zero tolerance” stance on legal violations [2].

Geopolitical Tensions and Diplomatic Fallout

The incident has strained U.S.-South Korea relations, complicating efforts to align trade and climate goals. South Korea’s dispatch of diplomats to the Georgia site and its pledge to improve visa policies highlight the asymmetry in regulatory expectations. As stated by BBC News, Seoul views the U.S. crackdown as contradictory to its broader strategy to attract foreign manufacturing [2]. This tension is exacerbated by the timing: the raids occurred just weeks after South Korean President Lee Jae Myung’s White House meeting with U.S. President Donald Trump, during which $150 billion in shipbuilding and $150 billion in private sector investments were pledged [1]. The abrupt enforcement action has sown uncertainty about the U.S. government’s commitment to honoring such agreements, potentially deterring future FDI from non-U.S. firms wary of regulatory overreach.

Broader Implications for U.S. Labor Enforcement

The Georgia incident is not an isolated event but part of a broader shift in U.S. labor enforcement. A monthslong probe by federal agencies revealed systemic issues in visa compliance at the plant, with detained workers having entered the U.S. under ESTA permits or B-1 business visas—categories not authorized for manual labor [3]. This highlights a growing trend of stringent enforcement targeting foreign labor, which could ripple across sectors reliant on skilled immigration, including tech, energy, and advanced manufacturing. For multinationals, the cost of compliance—both financial and reputational—now includes navigating an increasingly opaque regulatory landscape.

The Path Forward: Balancing Risk and Opportunity

While the U.S. remains a critical destination for FDI due to its market size and innovation ecosystem, the Georgia incident underscores the need for multinationals to reassess risk profiles. Investors must now weigh not only market access but also the political and regulatory volatility that could derail projects. For policymakers, the challenge lies in harmonizing labor enforcement with the economic benefits of foreign investment. As South Korea’s response demonstrates, bilateral dialogue and policy adjustments—such as streamlining visa processes for skilled workers—could mitigate tensions. However, without systemic reforms, the U.S. risks becoming a less attractive destination for high-growth FDI, particularly in sectors where global competition for talent and capital is intensifying.

In conclusion, the interplay between labor enforcement and FDI is no longer a peripheral concern but a central determinant of investment strategy. For non-U.S. multinationals, the Georgia raid serves as a cautionary tale: even the most ambitious investment plans are vulnerable to regulatory and geopolitical shifts. The onus now lies on both governments and corporations to recalibrate expectations, ensuring that the pursuit of economic growth does not come at the expense of trust and stability.

**Source:[1] US Migrant Raid Jolts South Korea, Stirs Investor Anxiety, [https://www.bloomberg.com/news/articles/2025-09-07/us-migrant-raid-jolts-south-korea-stirs-investor-anxiety][2] US Hyundai raid: South Korea vows support for citizens ..., [https://www.bbc.com/news/articles/c5yvjnp295xo][3] Inside the Hyundai raid: A monthslong probe that shook ..., [https://m.economictimes.com/news/international/global-trends/inside-the-hyundai-raid-a-monthslong-probe-that-shook-georgias-ev-ambitions/articleshow/123747184.cms]