For years, South Korea has been one of America’s closest allies and a linchpin in the global supply chain for everything from cars to high-tech batteries. But tensions between Washington and Seoul have reached a boiling point this September, after a massive immigration raid at a Georgia construction site and a bruising standoff over a proposed trade deal left both sides frustrated—and businesses caught in the crossfire.
On September 4, 2025, nearly 500 armed officers stormed the construction site of a $4.3 billion Hyundai-LG battery plant in Ellabell, Georgia. The raid, ordered by President Donald Trump’s administration, resulted in the arrest of 475 workers, most of them South Korean nationals. According to CNN, it was the largest immigration operation of Trump’s second term, coming less than two weeks after a high-profile Oval Office summit between Trump and South Korean President Lee Jae Myung. At that meeting, Seoul committed to invest a staggering $350 billion to expand manufacturing operations on U.S. soil—exactly the kind of deal the Trump administration has championed in its push to rebuild American industry.
Yet, the aftermath of the raid sent shockwaves through both countries. Images of Korean workers, shackled at the wrists, waist, and ankles, being loaded onto buses dominated South Korean front pages. The response from Seoul was swift and furious. Choi Jong-gun, a former vice foreign minister, told The Washington Post, “We are there to help boost up American industries… and once they are set up, there will be good infrastructure for increasing American employment. But what we saw was those Koreans chained with handcuffs and treated as if they were terrorists or a bunch of thugs.”
The fallout didn’t stop there. South Korean officials quickly announced plans to charter a flight to bring the detained workers home. Meanwhile, Hyundai stated to CNN that its U.S. investment commitment “remains unchanged,” but admitted that some business trips to the U.S. would now be “subject to internal review.” Samsung, for its part, issued new internal guidelines capping U.S. business trips on short-term visas at two weeks.
Visa issues have long been a thorn in the side of Korean conglomerates operating in the U.S. As Financial Times reported, bringing in specialized workers on short-term visas has often been a necessity for setting up proprietary equipment and training local staff. But the legal gray area around these visas—especially the use of ESTA and B-1 business categories, which prohibit receiving U.S.-based salaries—has left companies vulnerable. American authorities, especially in Georgia, had previously “turned a blind eye” to these practices, according to Jonathan Cleave of Intralink, a consultancy supporting foreign investment in the U.S.
That era of quiet tolerance appears to be over. U.S. Commerce Secretary Howard Lutnick, in a blunt interview with CNBC, warned that Korea must either accept a contentious bilateral trade deal or face steep tariffs. “The Koreans either accept that deal or pay the tariffs. Black and white. Pay the tariffs or accept the deal,” Lutnick declared. He pointedly noted that despite President Lee’s August 25 visit to the White House, “Notice how we didn’t talk about trade because he didn’t sign the piece of paper.”
At the heart of the deadlock is a framework agreement reached in late July. Under its terms, Washington would reduce proposed tariffs on Korean goods from 25 percent to 15 percent if Seoul commits to a $350 billion investment in the U.S., along with additional pledges—including direct investment from major Korean conglomerates. But the two sides remain at odds over the structure of the investment package, profit-sharing, and enforcement mechanisms.
Failure to reach a deal would mean Korean automakers could face a 25 percent tariff on exports to the U.S.—10 percent higher than what Japan pays. That could severely disadvantage Korean companies in a key market. The issue has split opinion among Korean experts. One trade specialist told The Korea Times that “paying for a 15 percent tariff reduction by financing a $350 billion U.S. investment fund, plus an additional $150 billion in direct corporate investment, is far beyond what Korea’s economy can reasonably justify.” The expert urged Seoul not to rush but to seek a “win-win solution” even if it takes more time.
Others argue that Korea needs to secure binding commitments from Washington to ensure predictability for its businesses. Choi Won-mog, a law professor at Ewha Womans University, told The Korea Times, “We need to start establishing binding principles with the U.S. by signing and clearly defining the scope and use of investments. That way, Korean businesses gain predictability and protection from future tariff hikes under shifting trade balances.” He also warned that without such a binding agreement, Washington could exploit trade imbalances to reimpose tariffs on an annual basis, destabilizing Korean exporters even further.
Choi also pointed to a recent U.S. Court of Appeals ruling that found the International Emergency Economic Powers Act does not authorize the president to impose sweeping tariffs on nearly all imports. He suggested that Korea could include provisions for tariff refunds in case U.S. courts eventually strike down the measures. But he cautioned, “Only by building binding, credible commitments and principles with the U.S. can we give Korean businesses the predictability they need.”
The visa issue is now expected to be a formal part of ongoing negotiations. Lutnick stressed that compliance is non-negotiable: “Get the right visa and if you’re having problems getting the right visa, call me. I’ll call [Homeland Security Secretary] Kristi Noem. We’ll help you get the right visa, but don’t do it the wrong way. Donald Trump requires you to do it correctly.”
Meanwhile, the practical fallout from the raid is already being felt. Construction of the Hyundai-LG battery plant in Georgia has ground to a halt. Hyundai Motor CEO Jose Munoz told Bloomberg on September 12 that the raid would delay the project by at least two to three months. “This is going to give us a minimum two to three months’ delay, because now all these people want to get back. Then you need to see how you can fill those positions. And for the most part, those people are not in the U.S.,” he said.
As the standoff drags on, there’s little sign of a quick resolution. Experts warn that “Trumpism” in trade policy is likely to persist, driven by U.S.-China rivalry and the domestic political climate. Choi predicted, “Trump-style reciprocal tariffs will not be temporary. They will likely continue for the next 20 years.” With both sides digging in their heels, Korean businesses and workers are left navigating a landscape where the rules seem to change overnight—and the costs of miscalculation are steep.
For now, the future of U.S.-Korea trade hangs in the balance, with billions in investment, thousands of jobs, and the stability of a vital alliance on the line.
