South Korean Investment in the U.S. Faces Uncertainty After Raids
The robust economic relationship between the U.S. and South Korea,marked by $242.5 billion in bilateral trade last year and $26 billion in South Korean investment in the U.S., is facing a period of uncertainty following recent immigration raids. These raids, including one at a Hyundai Motor Group supplier facility in Georgia, are prompting South Korean companies to reassess their importent expansion plans within the united States.
Former President Trump had championed ambitious manufacturing projects like the one targeted in Georgia as a means to revitalize American industry. Hyundai, a major investor with approximately $20 billion already committed since the 1980s – selling 836,802 vehicles in the U.S. last year and operating over 70 dealerships in California alone – recently announced an additional $26 billion investment for a new steel mill in Louisiana and upgrades to existing auto plants. This expansion was, in part, a response to a $150 billion pledge from South Korea aimed at securing a 15% tariff rate on Korean products, rather than the initially proposed 25% by President Trump. Samsung Electronics has also committed $37 billion to a semiconductor factory in Texas,with similar large-scale investments anticipated from South Korean shipbuilders.
However, the recent enforcement actions are creating a sense of vulnerability among these companies. U.S.officials have signaled further crackdowns, with White House border advisor Tom Homan stating that employers exploit undocumented workers to reduce labor costs and gain a competitive edge. This has led to a significant reaction within the South Korean business community. Local media reports indicate that many companies have either banned work-related travel to the U.S. or are recalling personnel already stationed there, and construction has been halted on at least 22 U.S. factory sites.
A survey by the Korea Economic Daily revealed that 10 out of 14 companies contacted are considering adjustments to their U.S. projects in light of the Georgia raids. A key challenge lies in the need for specialized South Korean engineering teams to establish and launch these new manufacturing facilities. Obtaining the necessary work visas is a lengthy and complex process, leading companies to previously rely on the Electronic System for Travel Authorization (ESTA) – a non-work permit allowing tourist stays of up to 90 days – as a workaround.
Unlike nations like Singapore or mexico, South korea lacks a reciprocal agreement with the U.S. guaranteeing work visas for specialized personnel. A manager at an LG Energy Solution subcontractor, speaking anonymously, highlighted this dilemma: “The U.S. keeps calling for more investments into the country. But no matter how many people we end up hiring locally later, there is no way around bringing in South Korean experts to get things off the ground… But now we can no longer use ESTAs like we did in the past.”
President Trump acknowledged the issue on his Truth Social platform, stating his intention to streamline the visa process for South Korean companies while emphasizing the importance of adhering to U.S. immigration laws.He encouraged companies to “LEGALLY bring your very smart people… and we will make it quickly and legally possible for you to do so.”
While acknowledging the raids as an “irritant,” Sydney Seiler, senior advisor and Korea chair at the Center for Strategic and International Studies, believes South Korean companies will ultimately adapt. However, she notes that “Rectifying that is a challenge for all involved, the companies, the embassies who issue visas, etc.” and predicts the raids will encourage greater caution among companies in the future.