Korea Was Betting Big on U.S. Investment. After the Hyundai-LG ICE Raid, It’s Not So Sure.

Last week, U.S. Immigration and Customs Enforcement (ICE) detained more than 300 Korean workers at the joint Hyundai-LG battery plant in Bryan County, Georgia, in what the Department of Homeland Security described as a routine enforcement operation of federal law. But in Seoul, the images of Korean citizens in restraints sparked a rare cross-partisan, national consensus. The incident illuminates how domestic U.S. actions—regardless of intent—can create unintended diplomatic friction with key allies, particularly those who have repositioned their entire strategic approach around deeper partnership with the United States.

From Military Alliance to Economic Alignment

Geopolitical context is crucial for understanding Korea’s reaction. For more than a decade, South Korea pursued a strategy so central that it was given a name: anmi kyeongjung, or “security with the United States, economy with China.” Seoul framed this approach as a pragmatic way to harness Beijing’s economic rise and complementary economic base while preserving security alignment with the United States. But in Washington, across both Democratic and Republican administrations since the 2000s, Seoul’s approach was scrutinized as a potential liability to the seventy-two-year-old alliance commitment.

This perception gap obscured the genuine Korean struggle with an impossible geography—caught between the world’s two superpowers with outsized economic dependence on both. What Korean policymakers saw as sophisticated statecraft, Washington interpreted as hedging. The binary choice framework imposed by American observers failed to capture the complexity of Korea’s strategic dilemma.

In fact, Seoul’s view of its economic future had already been shifting. Korean companies had been finding it increasingly difficult to operate in China due to intensifying government oversight, requirements for local partnerships, decreasing profit margins, and concerns about intellectual property theft. Many Korean firms already had begun reshoring operations into Southeast Asia and North America. Moreover, China’s economic rise had transformed it from a complementary economy to a direct competitor in key Korean industrial sectors, particularly high-tech manufacturing. A turning point occurred in 2017 when Seoul agreed to host a new U.S. missile defense system against North Korea. China responded with punishing coercive measures targeting Korean businesses, cultural exports, and tourism.

In the years since, Korean elites across the political spectrum have questioned the sustainability of anmi kyeongjung. Even progressive policymakers who broadly envisioned Korea as a regional “balancer” now acknowledge the primacy of the U.S.-ROK alliance framework and a need to shift industry and investment to the United States. Current President Lee Jae Myung has signaled the pragmatic need to prioritize industrial investment in the United States. This shift represented a fundamental strategic reorientation: Korea chose sides in great power competition, accepting economic costs with China in exchange for security and technological alignment with the United States.

Investment as Statecraft

The depth of this reorientation extends beyond diplomatic rhetoric to expensive industrial commitments. Despite steep costs, Korean companies are now making large-scale manufacturing investments in the United States. On average, China has a 30 percent average price advantage, that reaches up to 75 percent in categories where Chinese producers dominate. As a result, Korea’s U.S. investments represent genuine economic sacrifice in the name of strategic alignment. Even more crucially, Korea is investing in its ally’s economy rather than its own, at a moment when it faces sluggish economic performance and new 15 percent U.S. tariffs.

Unlike in typical private sector–led foreign direct investment, Korean government officials have worked with large conglomerates to explicitly position these projects as alliance contributions and a key strategy to offset trade tensions with the administration of U.S. President Donald Trump. Despite the tariffs the administration announced on July 30, Korean trade negotiators continued emphasizing these investments as evidence of Korea’s contribution to American manufacturing competitiveness and job creation. When Lee met with Trump in the Oval Office in August, both leaders touted an additional $150 billion package dubbed Make American Shipbuilding Great Again, an appeal to Trump’s manufacturing priorities that included building U.S. shipyards and training American personnel.

The joint Hyundai-LG electric vehicle battery plant is another such project that illustrates the notable level of government coordination behind these private investments. It operates alongside Hyundai’s nearly $8 billion electric vehicle Metaplant as part of the largest industrial project in Georgia’s history that promises more than 8,000 American jobs. Both governments have positioned this and similar projects as flagship models for alliance-driven manufacturing investment. Yet industry insiders and local governments have long been aware that the scale of this commitment also highlighted systemic challenges: With local unemployment at just 2.9 percent and a metro population of only 400,000, Savannah may be unable to fill those positions, and fully staffing the operation would require extensive recruitment efforts stretching across the East Coast and Sun Belt, as well as comprehensive retraining programs. 

Given this context, the scale and visuals of detention at one of these flagship projects could be seen as a rejection of Korea’s primary diplomatic tool for managing bilateral economic frictions and a direct threat to the industrial partnerships that require extensive expertise to succeed.

A Nation’s Outrage

In response to the arrests, Korean governmental and political reactions conveyed a sense of alliance betrayal while emphasizing commitment to resolving the crisis and deepening industrial cooperation. Foreign Minister Cho Hyun traveled to Washington to secure the workers’ release. He emphasized Lee’s message that Korean nationals’ rights “should not be unjustly violated during U.S. law enforcement processes” while also coordinating with representatives from major Korean conglomerates—including LG, Hyundai, Samsung, SK, and Hanwha—to address visa challenges. 

Back in Korea, lawmakers questioned American intentions, with the ruling party’s members declaring that “if the United States truly wants to attract investment from Korean companies, this kind of incident should not happen.” The arrests prompted emergency parliamentary hearings, reflecting how the event crossed typical partisan divides to create unified outrage over alliance treatment. But it also suggests Korean leaders’ determination to work through the crisis rather than abandon their strategic pivot toward the United States.

The Korean media response also reveals the depth of perceived affront. In an instructive social media post, Seoul-based journalist Raphael Rashid translated and documented the unusual consensus of outrage across the deeply divided political spectrum in Korean media. The conservative Korea Economic Daily called the ICE arrests “absurd” and warned it would be “behavior betraying alliance trust” if used as trade leverage. Major conservative daily JoongAng Ilbo wrote the incident "shook the values and trust of the ROK-US alliance” especially since it happened at “the symbolic site of an [expanding] economic alliance.” The progressive Hankyoreh was even more direct, with the headline “Is this what you do to an ally?” and describing Koreans as feeling “backstabbed.” Seoul Economic Daily described Korean workers being treated like “prisoners of war.”

In addition, the images of Koreans in restraints, made public by ICE, triggered what Rashid identified as “collective memories of subjugation”—historical sensitivities about foreign humiliation that transcend typical policy disagreements. As a result, the photos of its handcuffed citizens evoke anxieties about remaining vulnerable to the actions of larger powers, despite its status as an economic and cultural powerhouse.

Strategic Whiplash

The timing compounds Korean frustration. Lee’s August White House visit just a week prior was widely seen in Seoul and Washington as an important step in alliance management—though light on policy substance, it was heavy on rapport-building, with Trump explicitly praising Korean investment commitments. For Korean officials and industrial leaders who had spent years repositioning away from China and toward deeper U.S. economic integration, enforcement actions targeting their flagship investment projects created strategic whiplash.

Korean companies are now reconsidering these projects. LG Energy Solution paused construction work at the battery plant, while at least twenty-two other Korean factory sites across automotive, shipbuilding, steel, and electrical equipment sectors have been halted, as major conglomerates grapple with precautions about U.S. travel and urgently verify visa statuses. The shipbuilding initiative that Trump and Lee celebrated also faces potential stalling, with Seoul warning that ongoing funding negotiations could derail Korea’s commitments without resolution of the worker visa issues. Industry insiders worry about delays to ongoing projects requiring hundreds of Korean technical personnel, from shipbuilding to steel mill construction.

This hesitation reflects broader Korean concerns about mixed signals from Washington. Their shock and opprobrium, particularly on the ICE images, centered on dignified treatment rather than legal exemptions, suggesting their strategic contributions might not ensure the respectful partnership they had anticipated.

Alliance Management Implications

After news of the arrests broke, Korean diplomats promptly sought the release of the detained workers. A Korean Air flight chartered to bring the detained Koreans home remains grounded in Atlanta awaiting the workers’ release, which has been delayed as of publication. Seoul and Washington have made potential progress on diplomatic talks about securing appropriate visas for technical personnel that Korean facilities cannot source locally. Trump acknowledged the practical challenges, telling reporters: “Your investments are welcome, and we encourage you to legally bring your very smart people.”

The Korean reaction illustrates how what the U.S. administration perceives as routine domestic enforcement can be interpreted by allies as a referendum on their strategic value. Korea’s industrial pivot toward the United States involved accepting economic costs with China and domestic political risks from constituencies skeptical of deeper alliance integration. Korean officials positioned industrial investment as proof of alliance value, making enforcement actions feel like rejection of that strategic gesture.

For Korean policymakers, the incident raises uncomfortable questions about the sustainability of economic partnership and industrial cooperation within the alliance framework. Having opted for strategic alignment over hedging, Korea now confronts whether that choice provides the predictable business environment necessary for the large-scale industrial cooperation both governments have promoted.

The broader lesson extends beyond Korea. As the United States seeks to rebuild domestic manufacturing capacity and counter China’s technological advancement, it increasingly relies on allied industrial cooperation. But these governments and businesses need confidence that their strategic contributions will be recognized and protected within normal policy implementation. Perception gaps between domestic enforcement and alliance management risk undermining the very industrial partnerships both sides seek to deepen.