The US Immigration Crackdown and Its Impact on Foreign Direct Investment in the Battery Manufacturing Sector

The U.S. immigration policy landscape in 2025 has become a critical variable for foreign direct investment (FDI) in the battery manufacturing sector, intertwining regulatory enforcement with geopolitical strategy. Under the Trump administration's "America First" agenda, immigration crackdowns and tariff adjustments have created a volatile environment for cross-border manufacturing ventures. This analysis examines how these policies are reshaping FDI dynamics, focusing on labor availability, supply chain resilience, and the broader geopolitical risks that investors must navigate.

Regulatory Risks: Immigration Enforcement and Labor Shortages

The U.S. Immigration and Customs Enforcement (ICE) raid at a Hyundai-LG battery plant in Georgia in September 2025 exemplifies the immediate risks of stringent immigration policies. The operation detained 475 individuals, including over 300 South Korean nationals, halting construction and disrupting operations at the facility South Korea objects as US detains 475 at Hyundai plant^[1]. While the companies claimed they were not directly employing the detained workers, the incident exposed vulnerabilities in reliance on immigrant labor for technical expertise in high-skill sectors like battery manufacturing LGES pauses US factory construction after raid^[2]. South Korea's Foreign Ministry condemned the raid, emphasizing its negative impact on investor confidence and bilateral economic relations South Korea objects as US detains 475 at Hyundai plant^[1].

Such enforcement actions underscore a broader trend: U.S. immigration policies are increasingly weaponized to address labor market concerns, even in industries critical to national security and industrial policy. The Inflation Reduction Act (IRA) has incentivized domestic battery production, but its success hinges on a stable labor force. Restrictions on work visas and heightened scrutiny of employment practices could deter foreign firms from investing in U.S. projects, particularly those requiring specialized, hard-to-source talent Harnessing New Investments in Industrial Policy to Advance North American Competitiveness^[3].

Geopolitical Risks: Supply Chain Fragmentation and Regional Tensions

Beyond labor issues, U.S. immigration and trade policies are exacerbating geopolitical uncertainties in North American supply chains. The Trump administration's proposed 25% tariffs on Mexican and Canadian exports, framed as leverage in renegotiating USMCA terms, have introduced volatility for cross-border battery manufacturing ventures Trump 2.0 and the future of the North American trade bloc^[4]. Mexico's "Plan México" aims to attract nearshoring investments by offering incentives for electromobility and battery production, but U.S. immigration-related trade threats could undermine these efforts Trump 2.0 and the future of the North American trade bloc^[4].

China's dominance in critical mineral processing further complicates the landscape. Despite U.S. efforts to diversify supply chains through partnerships with allies like Canada and Mexico, regulatory hurdles—such as lengthy environmental assessments in Canada and nationalization risks in Mexico—remain significant barriers Ten global issues to shape mining and metals markets in 2025^[5]. China's export restrictions on minerals like gallium and germanium have already highlighted the fragility of global supply chains, prompting the Biden administration to prioritize reshoring initiatives A US framework for assessing risk in critical mineral supply chains^[6]. However, a Trump-led "America First" approach may prioritize protectionism over collaboration, increasing costs and reducing flexibility for U.S. firms A US framework for assessing risk in critical mineral supply chains^[6].

Case Study: Hyundai-LG and the Ripple Effects of Policy Uncertainty

The Hyundai-LG incident illustrates the cascading effects of immigration enforcement on FDI. Following the ICE raid, LG Energy Solution announced a delay in production at the Georgia plant, citing "market conditions" rather than the immigration issue—a move widely interpreted as damage control LGES pauses US factory construction after raid^[2]. The South Korean government secured a repatriation deal for detained workers, but the episode has left lingering concerns about the U.S. as a reliable destination for high-stakes manufacturing ventures South Korea objects as US detains 475 at Hyundai plant^[1].

This case highlights a key tension: while the U.S. positions itself as a hub for strategic industries through incentives like the IRA, its immigration policies risk creating an environment of unpredictability. For foreign investors, the challenge lies in balancing access to U.S. markets with the risks of regulatory overreach and geopolitical friction.

Implications for Investors: Navigating a Shifting Landscape

Investors in the battery manufacturing sector must now assess FDI opportunities through a dual lens of regulatory and geopolitical risk. Key considerations include:
1. Labor Strategy: Diversifying labor sources to mitigate reliance on immigrant workers, while navigating U.S. visa restrictions.
2. Supply Chain Resilience: Prioritizing regional partnerships with allies like Canada and Mexico, while hedging against U.S. policy shifts.
3. Geopolitical Diversification: Exploring alternative mineral sources, such as Gulf states expanding mining capabilities, to reduce exposure to China's dominance Ten global issues to shape mining and metals markets in 2025^[7].

Conclusion

The U.S. immigration crackdown of 2025 has underscored the fragility of FDI in the battery manufacturing sector, where regulatory enforcement and geopolitical tensions intersect. While the IRA and nearshoring initiatives offer long-term incentives, short-term uncertainties—such as ICE raids and tariff threats—pose immediate risks. For investors, the path forward requires a nuanced understanding of how U.S. policy shifts can disrupt labor markets, supply chains, and regional alliances. As the global race for battery dominance intensifies, the ability to navigate these cross-border risks will determine the success of cross-border manufacturing ventures.