Assessing Geopolitical and Regulatory Risks in U.S.-Korea Cross-Border Investments

The recent ICE raid at a Hyundai battery plant in Georgia, which resulted in the detention of 475 individuals—most of them South Korean nationals—has ignited a firestorm of diplomatic and regulatory concerns. This operation, described as the largest single-site immigration enforcement action in U.S. history, underscores the growing risks for foreign investors navigating the complex interplay of U.S. immigration policies, corporate compliance, and geopolitical tensions. For South Korea, a nation that has pledged $350 billion in U.S. investments by 2030, the incident raises urgent questions about the stability of cross-border partnerships in an era of heightened scrutiny under the Trump administration’s “America First” agenda.

Regulatory Compliance: A Double-Edged Sword

The ICE raid targeted workers found to be in violation of U.S. immigration laws, including those who overstayed visitor visas, worked under restricted ESTA permits, or entered the country illegally. According to a report by The BBC, many of the detained individuals were subcontractors employed at the Hyundai-LG Energy Solution plant, which is central to the U.S. electric vehicle supply chain [1]. While Hyundai has distanced itself from direct responsibility, stating that none of the detainees were its employees, the incident highlights the vulnerabilities of supply chains reliant on third-party labor.

The U.S. Department of Homeland Security (DHS) justified the raid as a necessary step to “protect American jobs and prevent unfair advantages for employers who exploit undocumented labor” [3]. However, for foreign investors, the operation signals a shift toward stricter enforcement of labor and immigration regulations. The Trump administration’s “America First Investment Policy,” outlined in a February 2025 memorandum, mandates risk-based assessments for foreign investments in sensitive sectors like technology and energy, with a particular focus on distancing from “foreign adversaries” [2]. This policy not only increases compliance burdens but also creates a climate of uncertainty for firms like Hyundai, which must now navigate overlapping layers of immigration, labor, and investment scrutiny.

Diplomatic Tensions and Strategic Leverage

South Korea’s response has been swift and unequivocal. President Lee Jae-myung and Foreign Minister Cho Hyun have expressed “deep concern” over the raid, with the latter indicating a willingness to travel to Washington for direct consultations [1]. The South Korean government has emphasized that the rights of its citizens and the interests of its investors must not be “unjustly infringed” during U.S. law enforcement actions [3]. This diplomatic push reflects broader anxieties about the potential use of immigration enforcement as a tool for economic leverage.

Analysts suggest that the raid could be a strategic move to assert influence in ongoing trade negotiations, particularly regarding the Inflation Reduction Act and semiconductor policies [4]. By targeting a high-profile project like the Hyundai-LG battery plant, the U.S. administration may be signaling its commitment to prioritizing domestic labor and industries, even at the risk of straining alliances. For South Korea, which relies heavily on U.S. markets for its automotive and tech exports, the incident underscores the fragility of geopolitical trust in an era of competing national interests.

Corporate Strategies: Compliance and Risk Mitigation

In the wake of the raid, Hyundai and LG Energy Solution have pledged to review their subcontractor practices to ensure legal compliance [5]. This response mirrors a broader trend among multinational corporations to strengthen due diligence protocols in supply chains. However, as noted by experts in The Korea Post, the incident also highlights the operational risks of large-scale immigration enforcement actions, including project delays, increased costs, and reputational damage [4].

For foreign investors, the lesson is clear: regulatory compliance must extend beyond corporate headquarters to include subcontractors, contractors, and local labor practices. The U.S. Investment Policy’s emphasis on “verifiable distance” from foreign adversaries further complicates this landscape, requiring firms to demonstrate not only legal adherence but also strategic alignment with U.S. national security priorities [2].

The Road Ahead

The ICE raid at the Hyundai plant is a harbinger of a more challenging environment for cross-border investments. As the U.S. continues to tighten immigration and investment regulations, foreign firms must adopt proactive strategies to mitigate risks. This includes:
1. Enhanced Supply Chain Audits: Regular reviews of subcontractor compliance with U.S. labor and immigration laws.
2. Diplomatic Engagement: Proactive dialogue with host governments to address concerns and align regulatory expectations.
3. Scenario Planning: Preparing for potential disruptions, such as project delays or increased compliance costs, in high-risk sectors.

For South Korea, the incident is a wake-up call to reassess its investment strategies in the U.S. while balancing economic ambitions with diplomatic sensitivities. As the global economy becomes increasingly interconnected yet politically fragmented, the ability to navigate regulatory and geopolitical risks will define the success of cross-border ventures.

Source:
[1] Raid on Hyundai plant in US swept up workers on visitor visas [https://www.bbc.com/news/articles/cy50yge052xo]
[2] The “America First Investment Policy” – Implications for International Investors [https://www.clydeco.com/en/insights/2025/03/insight-into-the-america-first-investment-policy]
[3] 475 people detained in Georgia Hyundai raid by ICE, other... [https://www.cbsnews.com/news/hyundai-georigia-ice-raid-450-detained-electric-vehicles-batteries/]
[4] [Urgent Diplomatic Market Analysis]Georgia Hyundai–LG Energy Solution Site Raid Sparks Diplomatic and Economic Concerns [https://www.koreapost.co.kr/news/articleView.html?idxno=81761]
[5] Immigration Raid on Hyundai-LG Plant in Georgia Rattles... [https://www.nytimes.com/2025/09/06/world/asia/immigration-raid-hyundai-lg-south-korea-georgia.html]