The U.S. Immigration Enforcement Shift and Its Impact on South Korean EV Supply Chain Investments

The U.S. immigration enforcement policies under President Donald Trump in 2025 have created a seismic shift in the geopolitical and economic landscape for foreign manufacturers, particularly in the electric vehicle (EV) sector. South Korean automakers, which have committed over $350 billion in U.S. investments for EV and clean energy projects, now face a dual challenge: navigating stringent immigration enforcement and adapting to rising tariffs. These pressures are reshaping corporate strategies, supply chain dynamics, and risk assessment frameworks, with implications for global investors.

Geopolitical Risk and Labor Disruptions

The Trump administration’s aggressive immigration enforcement, including ICE raids targeting undocumented workers, has directly disrupted South Korean EV operations. In September 2025, a raid at a Hyundai-LG Energy Solution battery plant in Georgia detained 475 individuals, most of whom were South Korean nationals working under expired visas or non-work permits such as ESTA [1]. This incident, described as the largest single-site immigration enforcement action in U.S. history, exposed vulnerabilities in labor compliance and highlighted the risks of relying on temporary visa categories for critical manufacturing roles [2].

South Korea’s diplomatic response—negotiating the release of over 300 detained workers and chartering repatriation flights—underscored the geopolitical tensions arising from U.S. immigration policies [3]. The incident also raised concerns about the viability of South Korean investments in the U.S. EV sector, as companies now face heightened scrutiny over subcontractor compliance and labor practices [4].

Corporate Due Diligence and Supply Chain Adjustments

In response to these challenges, South Korean EV manufacturers have implemented robust due diligence frameworks. Hyundai and LG Energy Solution suspended business trips to the U.S. and instructed employees to return home, while conducting internal audits of subcontractor labor practices [5]. LG Energy Solution emphasized cooperation with U.S. and South Korean authorities to ensure employee safety and legal compliance [6].

Beyond immediate compliance measures, firms are restructuring supply chains to mitigate risks. For instance, Ecopro and SK On secured a $26 billion lithium hydroxide supply agreement in 2025, sourcing materials from South Korean facilities to comply with the U.S. Inflation Reduction Act (IRA) and reduce reliance on Chinese suppliers [7]. This shift aligns with broader industry trends to diversify supply chains amid U.S. tariffs on Chinese EV components and geopolitical uncertainties [8].

Tariff Pressures and Strategic Localization

U.S. tariffs, including 15% on South Korean goods and 100% on Chinese EVs, have further complicated operations. South Korean automakers are retooling production lines to manufacture cost-competitive lithium iron phosphate (LFP) batteries in the U.S., bypassing tariffs and qualifying for U.S. tax credits [9]. For example, LG Energy Solution and General Motors are upgrading Tennessee facilities to produce LFP batteries, while SK On partnered with domestic firms to secure non-PFE (Foreign Entity of Concern) materials [10].

These strategies reflect a broader industry pivot toward localization. South Korean companies are also leveraging U.S.-South Korea trade agreements, which cap tariffs at 15%, to offset some costs [11]. However, the South Korean manufacturing PMI fell below 50 in May 2025, signaling contraction, as U.S. tariffs and labor shortages strained export volumes [12].

Investor Implications and Future Outlook

For investors, the interplay of immigration enforcement, tariffs, and corporate adaptation presents both risks and opportunities. South Korean EV firms are demonstrating resilience through supply chain diversification and compliance investments, but geopolitical tensions and regulatory shifts remain significant headwinds. The Trump administration’s focus on domestic production and energy independence may further complicate foreign operations, particularly if immigration policies tighten further [13].

Conclusion

The U.S. immigration enforcement shift has forced South Korean EV manufacturers to recalibrate their strategies, blending corporate due diligence with geopolitical risk management. While these firms are adapting through localization and supply chain innovation, the long-term sustainability of their U.S. investments will depend on navigating an increasingly complex regulatory environment. Investors must monitor policy developments, labor compliance trends, and supply chain resilience as critical factors shaping the EV sector’s future.

Source:
[1] South Korea Raises Concern After U.S. Immigration Raid
https://www.forbes.com/sites/siladityaray/2025/09/05/south-korea-raises-concern-after-hundreds-are-detained-in-immigration-raid-at-hyundai-battery-plant-in-georgia/
[2] Largest-ever immigration raid: Hyundai-LG plant in Georgia targeted
https://timesofindia.indiatimes.com/world/us/largest-ever-immigration-raid-hyundai-lg-plant-in-georgia-targeted-7-6-billion-project-now-in-limbo-what-we-know/articleshow/123748218.cms
[3] South Korea says it has reached deal with US to release workers
https://ca.news.yahoo.com/seoul-concludes-us-talks-release-082438223.html
[4] ICE Arrests Almost 500 People at Hyundai Plant in Georgia
https://www.yahoo.com/news/articles/ice-arrests-almost-500-people-164438548.html
[5] South Korea charters plane to fly home over 300 workers detained by ICE
https://www.npr.org/2025/09/06/nx-s1-5532604/hyundai-immigration-raid-georgia-south-korea
[6] Work paused at Hyundai's US site as workers detained
https://www.rte.ie/news/business/2025/0905/1531986-work-paused-at-hyundais-us-site-as-workers-detained/
[7] Ecopro-SK On Sign Major Lithium Hydroxide Supply Deal
https://discoveryalert.com.au/news/ecopro-sk-on-2025-lithium-agreement-supply-chain/
[8] Trump policies greatly impact the global battery value chain
https://www.crugroup.com/en/communities/thought-leadership/2025/trumps-policies-have-far-reaching-impacts-on-the-global-battery-value-chain/
[9] Trade Shifts & EV Disruptions Shape July 2025 Auto Sector
https://natlawreview.com/article/foley-automotive-update-july-24-2025
[10] Korean battery firms grow US market share as restrictions on China tighten
https://asia.nikkei.com/business/automobiles/electric-vehicles/korean-battery-firms-grow-us-market-share-as-restrictions-on-china-tighten
[11] Implications of U.S. Tariffs on Southeast Asia
https://www.sidley.com/en/insights/newsupdates/2025/08/implications-of-us-tariffs-on-southeast-asia-navigating-the-trade-tumult
[12] South Korea's Factory Blues Deepen: New Orders Fall
https://stocktwits.com/news-articles/markets/equity/south-korea-s-factory-blues-deepen-demand-hits-covid-era-lows-as-us-tariffs-slam-new-orders/chkoHj6Rbuy
[13] The Trump Administration Transportation Policies
https://logisticsviewpoints.com/2025/03/05/the-trump-administration-transportation-policies-changes-impacts-and-strategic-actions/