Geopolitical Risk and Visa Policy Shifts: Implications for South Korean FDI in the U.S.

The U.S.-South Korea economic relationship has long been a cornerstone of global manufacturing innovation, but recent geopolitical and regulatory shifts are testing the resilience of this partnership. South Korean firms have poured over $114 billion into the U.S. over the past three years, with semiconductors and batteries as flagship sectors [3]. Yet, as of Q1 2025, the landscape is growing murkier.

Geopolitical Risks: Tariffs and Strategic Reassessment
The U.S. effective tariff rate on Korean exports has surged from 1% to 16%, a move that has forced companies to recalibrate their production strategies [1]. This escalation, coupled with global economic uncertainties and high interest rates, contributed to a 44.6% year-over-year decline in South Korean outbound FDI to the U.S. during Q3 2024 [2]. While semiconductor and battery projects remain priorities—Samsung’s $17 billion Texas chip plant and LG Energy Solution’s Georgia battery facility are case in point—the broader manufacturing sector faces headwinds.

Visa Policy Shifts: A Double-Edged Sword
The U.S. visa landscape has grown increasingly complex. On September 2, 2025, the Department of State ended broad interview waivers for nonimmigrant visa applicants, requiring in-person interviews for categories like H-1B and E-4 [2]. This policy, framed as a return to pre-pandemic security norms, has created bottlenecks for South Korean firms reliant on skilled labor. The E-4 visa, a proposed fast-track for Korean professionals in high-tech sectors, remains unimplemented, leaving gaps in workforce deployment [3].

Compounding these challenges, the Georgia immigration raid in September 2025—where 475 workers, including 300 South Koreans, were detained—highlighted vulnerabilities in compliance frameworks [1]. South Korean companies now face heightened scrutiny, with operational costs rising as they navigate stricter labor laws. Meanwhile, South Korea’s own immigration policies have tightened, raising investment thresholds for golden visas to $1.2 million [2]. While this shift targets high-value contributors, it indirectly signals a global trend toward selective immigration, which could ripple into U.S. investment dynamics.

Long-Term Viability: Innovation vs. Uncertainty
Despite these hurdles, the U.S. remains a critical destination for South Korean FDI. In 2024, U.S. manufacturing accounted for 24.2% of South Korea’s total outbound manufacturing investment, with semiconductors and batteries driving growth [2]. The proposed Partner with Korea Act, which would fast-track the E-4 visa, could mitigate some of these challenges by streamlining access to talent [3]. However, the Trump administration’s broader push for restrictive immigration enforcement—evidenced by enhanced visa scrutiny and raids—casts a shadow over long-term stability [4].

For South Korean firms, the calculus is clear: strategic sectors like semiconductors will likely retain U.S. investment, but ancillary industries may face delays or relocations. The key will be balancing short-term risks with long-term gains, leveraging U.S. innovation ecosystems while diversifying supply chains to buffer against geopolitical volatility.

Conclusion
South Korean manufacturing FDI in the U.S. is at a crossroads. While the U.S. offers unparalleled access to high-tech markets and talent, the confluence of rising tariffs, visa bottlenecks, and enforcement actions demands a recalibration of investment strategies. Companies that can navigate these headwinds—through policy advocacy, regulatory agility, and strategic partnerships—will emerge stronger. For now, the path forward is fraught, but the rewards for those who persevere remain substantial.

**Source:[1] Korea: OECD Economic Outlook, Volume 2025 Issue 1 [https://www.oecd.org/en/publications/oecd-economic-outlook-volume-2025-issue-1_83363382-en/full-report/korea_0e33c21e.html][2] Korea's OFDI, 2024 Full Year [https://www.korea.net/Government/Briefing-Room/Press-Releases/view?articleId=6118&insttCode=A260122&type=N][3] All-in On the U.S.-Korea Relationship - More Jobs ... [https://www.csis.org/analysis/all-us-korea-relationship-more-jobs-more-investment-more-prosperity][4] The Mobile Workforce | Mayer Brown LLP | Business ... [https://www.mobilework.law/]