Assessing Geopolitical Risk in U.S.-Korea Trade and Manufacturing Investments

The recent ICE raid at the Hyundai-LG Energy Solution battery plant in Georgia—detaining 475 workers, most of whom were South Korean nationals—has become a flashpoint in the evolving landscape of U.S. immigration enforcement and its implications for foreign investment. This operation, described as the largest single-site enforcement action in the history of Homeland Security Investigations (HSI), underscores a troubling trend: the weaponization of immigration policy to influence economic and geopolitical outcomes. For foreign investors, particularly those in U.S. manufacturing, the incident signals a sharp rise in operational and regulatory risks, with cascading effects on supply chains, diplomatic relations, and long-term strategic planning.

A Raids as a Strategic Tool

The September 2025 raid, dubbed “Operation Low Voltage,” targeted subcontractor labor practices at the $4.3 billion joint venture battery plant, temporarily halting construction and disrupting a critical node in the U.S. electric vehicle (EV) supply chain [1]. While U.S. authorities framed the operation as a routine enforcement of immigration laws, analysts argue it aligns with broader “America First” policies under the Trump administration. As stated by a report from Korea Post, the raid may reflect a deliberate effort to leverage immigration enforcement as a diplomatic tool, pressuring foreign firms to comply with U.S. labor standards or face operational disruptions [2]. This approach mirrors historical precedents, such as the use of tariffs or trade restrictions, but introduces a new dimension of unpredictability for multinational corporations.

South Korea’s Foreign Ministry condemned the operation, emphasizing that the rights of its nationals and the economic activities of its companies must not be “unduly violated” [1]. The incident has strained U.S.-South Korea trade relations at a sensitive moment, as both nations negotiate a $350 billion investment agreement. Hyundai and LG Energy Solution, while cooperating with U.S. authorities, have underscored the reputational and financial risks of such raids, which could deter future foreign direct investment (FDI) in U.S. manufacturing [3].

Broader Immigration Enforcement Trends

The Georgia raid is not an isolated event but part of a systemic tightening of U.S. immigration policy in 2025. Executive orders have intensified border security, expanded deportation actions, and restricted temporary work permits, creating a climate of uncertainty for industries reliant on immigrant labor. According to a report by the Manufacturers Alliance, foreign-born workers accounted for 19.2% of the U.S. labor force in 2024, with a participation rate (66.5%) exceeding that of native-born workers (61.7%) [4]. In manufacturing, where skilled labor shortages are acute, these policies threaten to exacerbate existing bottlenecks.

The agriculture sector offers a cautionary tale: immigration enforcement actions in 2025 reduced labor availability by 27% during peak seasons, leading to crop losses and higher production costs [5]. With 50–70% of U.S. agricultural labor filled by immigrants, similar disruptions in manufacturing could ripple through global supply chains. A survey by Littler Mendelson found that 70% of U.S. employers expect immigration enforcement to “significantly affect” their workplaces, with 58% citing staffing challenges [6]. For foreign investors, this translates to higher operational costs, reduced flexibility, and increased exposure to regulatory scrutiny.

Geopolitical and Regulatory Risks

The intersection of immigration policy and geopolitics is further complicated by U.S. efforts to secure supply chains against foreign adversaries. The Committee on Foreign Investment in the United States (CFIUS) has intensified scrutiny of transactions in critical sectors like semiconductors and R&D, with 2024 enforcement actions reaching record levels [7]. While these measures aim to protect national security, they also create a dual burden for foreign firms: navigating both immigration enforcement and CFIUS oversight.

For South Korean companies, the Georgia raid highlights the vulnerability of investments in politically sensitive sectors. The U.S.-China tariff war and broader U.S. efforts to decouple from China have already prompted firms to restructure supply chains, but immigration-related disruptions add a new layer of complexity. As noted in a McKinsey analysis, American businesses must now “prosper in a new geopolitical era” where regulatory risks are intertwined with diplomatic tensions [8].

Implications for Foreign Investors

Foreign investors in U.S. manufacturing must now factor in three key risks:
1. Operational Disruptions: Worksites raids, labor shortages, and compliance costs could delay projects and inflate expenses. The Georgia battery plant’s $4.3 billion investment, for example, now faces potential delays as construction resumes under heightened scrutiny [1].
2. Reputational Damage: Publicized enforcement actions, particularly those involving nationals of partner countries, risk damaging corporate reputations and straining diplomatic ties. Hyundai’s assertion that none of the detained workers were directly employed by the company underscores the reputational stakes [4].
3. Regulatory Uncertainty: Shifting immigration policies under a polarized U.S. political landscape make long-term planning difficult. A structural vector autoregression (VAR) model estimates suggest that declining unauthorized immigration is already reducing U.S. GDP growth by 0.75–1 percentage points in 2025 [9].

Conclusion

The ICE raid at the Hyundai-LG battery plant is a microcosm of a broader shift in U.S. immigration enforcement—one that increasingly intersects with geopolitical strategy and economic leverage. For foreign investors, the incident underscores the need for robust risk assessments, diversified labor strategies, and closer alignment with U.S. regulatory priorities. As the U.S. continues to prioritize supply chain resilience and national security, the line between immigration policy and economic diplomacy will blur further, demanding agility and foresight from global businesses.

Source:
[1] US immigration agents arrests hundreds at Hyundai plant, mostly Koreans [https://www.reuters.com/world/asia-pacific/us-immigration-agents-arrest-hundreds-hyundai-plant-mostly-koreans-2025-09-05/]
[2] [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]
[3] Hundreds of workers detained in US raid at Hyundai plant [https://www.dailysabah.com/business/automotive/hundreds-of-workers-detained-in-us-raid-at-hyundai-plant]
[4] Impact of Foreign-Born Workers on Manufacturing [https://www.manufacturersalliance.org/research-insights/impact-foreign-born-workers-manufacturing]
[5] Immigration In Agriculture: 2025 Supply Chain Impact [https://farmonaut.com/usa/immigration-in-agriculture-2025-supply-chain-impact]
[6] How Business Leaders Can Navigate a Shifting... [https://www.littler.com/press/external-publication/how-business-leaders-can-navigate-shifting-immigration-policy-landscape]
[7] CFIUS 2024 Annual Report: Key Trends, Enforcement, and..., [https://www.jdsupra.com/legalnews/cfius-2024-annual-report-key-trends-4765284/]
[8] How American geopolitics are reshaping business, [https://www.mckinsey.com/industries/public-sector/our-insights/how-american-business-can-prosper-in-the-new-geopolitical-era]
[9] Declining immigration weighs on GDP growth, with little..., [https://www.dallasfed.org/research/economics/2025/0708]