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Two weeks ago, U.S. immigration officials arrested almost 500 foreign nationals working at the construction site of a multibillion-dollar Georgia battery plant jointly owned by Korea’s LG and Hyundai. The raid, led by the U.S. Immigration and Customs Enforcement (ICE) and supposedly the largest-ever at a single location, has set off a firestorm of commentary regarding the very public arrest, detention, and expulsion of the 300-plus South Korean citizens involved—and a furious debate over whether they were working illegally at the Georgia site (and thus worthy of arrest).
Now that the workers have returned home and the South Korean government has opened a human rights investigation into their treatment, it’s increasingly clear that ICE messed up badly. The New York Times, for example, reports that the agency originally targeted only a few Hispanic workers and had no Korean translators on hand when the arrests were made. Even more suspiciously, ICE has refused to explain what immigration laws the Koreans actually broke, and their removal documents uncharacteristically lacked an express admission of wrongdoing. Other reports, meanwhile, note that U.S. immigration officers treated the Koreans terribly while in detention and wanted them all handcuffed upon departure—a second “per walk” that was thankfully avoided. Several U.S. government officials have also apologized to the Korean government, including once in public. For an administration that prides itself on never backing down, this is about as clear an admission of fault as you’ll get.
Whether the Koreans were technically violating U.S. immigration law is less clear. The Times notes that most of them were here on B-1 or B-1/B-2 visas, which are issued for business trips of up to six months, or through the State Department’s visa waiver program (ESTA), which allows for 90-day business or tourism trips without a visa. Other outlets have added that similar arrangements are common for foreign companies setting up new and complex facilities here—including for other Korean investments in Georgia. The Times admits, however, that this approach falls into a legal gray area about the exact type of work that’s allowed while in-country, and that it’s often used because a more clear-cut H-1B visa for skilled immigrants is difficult to get, especially quickly. Reuters adds that some Korean workers had expressed concerns about continuing to use “questionable” B-1 visas during an era of heightened U.S. enforcement.
Getting answers to these questions is all well and good, but there are also several important policy issues that the LG/Hyundai raid addresses—and none of them are good for the United States.
U.S. Immigration Law Remains a Mess
First, the incident is a clear example of the United States’ insanely bureaucratic and wildly irrational immigration laws—and how their needless complexity effectively creates an open license for government abuse. As noted above, several informed observers speculate that it may have been more appropriate for these workers to use an H-1B visa to avoid limits on the type of work they perform or the duration of their stay. But, the Times notes, a low and arbitrary cap on H-1Bs (only 85,000 total are issued each year) make them “expensive to apply for and in high demand,” and a lottery system for allocating these visas makes quickly obtaining one extremely uncertain. H-1B visas also have their own rules, another immigration expert tells me, that might exclude some of the Korean workers at issue. He speculates that the H-2B visa might be better for those folks, but—to the surprise of no one—it has its own onerous rules and arbitrary cap.
South Korea also lacks the kind of streamlined visa category that several other U.S. free trade agreement partners have (so those nations’ citizens can, quite logically, support the increased trade and investment the agreements generate). Combined, these legal hurdles have pushed Korean companies and their lawyers to look for quicker “workarounds” to bring in support staff for new U.S. investments—workarounds that wouldn’t be necessary if our immigration laws made any sense.
But they don’t, so many Korean firms (and other foreign investors) have turned to the B-1 visa and ESTA waiver to bring in temporary, specialized workers because those approvals are faster and easier to obtain than an H-1B. Yet they too come with headaches. As the Economic Innovation Group’s Sam Peak detailed last week, for example, the B-1 visa “prohibits most work activity,” including rote construction work, but contains exceptions for certain specialists and types of work (e.g., equipment installation). He speculates that these B-1 rules—and similar ones for the ESTA waivers the Koreans also used—allowed the workers at issue to legally enter the U.S. and work at the LG/Hyundai site. In practice, however, strict compliance with the visa’s restrictions would be messy:
[E]mployers would need to differentiate between manual labor that any tradesman can do versus highly specialized work that only the foreign worker can do. This distinction can get unreasonably blurry and burdensome very quickly. Somebody who is tasked with bolting foreign equipment to the floor might need specialized knowledge about that equipment. Having a domestic tradesman do this while following orders from a foreign specialist who is only fluent in Korean doesn’t seem very efficient and could result in many mistakes.
Endless technicalities and legal gray areas also hand the government a ton of discretion regarding who gets arrested and who doesn’t—and provide a recipe for abuse. If a project and its foreign workers are favored by the government, scrutiny could be light. (Various news reports indicate, in fact, that this kind of leniency has been common for big, flashy foreign investments.) On the other hand, if government agents really want to arrest and publicly humiliate foreign workers on a project that doesn’t have Washington’s blessing, the system gives them plenty of nits to pick. Never mind, of course, that the system is so complicated and ambiguous that—as the LG/Hyundai raid and aftermath show—even U.S. agencies in the same administration can’t seem to agree on what the exact rules are.
A simplified immigration system with fewer categories, conditions (e.g., who can work where, at what wage, and for how long), and arbitrary limits would greatly reduce these problems—and it would have considerable economic benefits to boot.
Industrial Policy, Again
Second, the incident is a classic case of how optimistic U.S. industrial policy plans can be thwarted by other government policies that increase costs, extend timelines, and otherwise discourage the very production and investment that the government says it wants. This conflict, as we’ve discussed, is one reason why bold predictions of industrial policy success often ring hollow: Subsidized projects that look good on paper run headfirst into other policies that impede, if not scuttle, the projects’ actual implementation. They’re also why industrial policy skeptics (like me) have long recommended policymakers fix well-known government impediments to domestic production (tax, trade, regulatory, immigration, etc.) before deciding that subsidies are needed to help “strategic” producers overcome supposed “market failures.” Refusal to follow this order of operation, we’ve warned, could be both costly (for taxpayers and the economy) and, ultimately, counterproductive.
In the current case, the policy conflict is clear: On the one hand, the LG/Hyundai facility has received billions of dollars in subsidies—$2.1 billion in state and local incentives, plus plenty more in federal Inflation Reduction Act tax credits. And it’s just the type of “strategic” foreign-invested factory that President Trump says his tariff and manufacturing policies are encouraging. (He even took credit for a separate Hyundai facility in Georgia that opened earlier this year—never mind the timing.) The U.S. government thus has a strong bipartisan interest that facilities like the LG/Hyundai battery plant get up and running as soon as possible, and it’s even established a new “investment accelerator” to speed the projects up.
On the other hand, the Trump-led government has also vowed to strictly enforce every letter of U.S. immigration law, even though it’s a well-known and longstanding brake on domestic investment and growth—especially for innovative industries like advanced manufacturing that depend on workers with big brains and specialized skills. (As we’ve discussed, for example, past U.S. reductions in skilled immigration have caused multinationals to move offshore so they can better access the talent they need; and the first Trump administration quietly accelerated visa approvals for semiconductor giant TSMC for this very reason.) Draconian enforcement efforts, which encourage (if not demand) very public shows of force and the achievement of arbitrary arrest/removal quotas, undoubtedly amplify immigration restrictions’ harms in this regard—something we also discussed when looking at past U.S. deportation campaigns.
This problem is now playing out in Georgia, bigly. The ICE raid immediately halted construction at the factory, and it won’t resume until the Korean companies find willing and capable replacements. That process will take months, because Korean workers aren’t excited to return (duh) and because there aren’t American replacements due to the specialized nature of the work at issue—such as installing Korean machinery. (It’s now being reported, in fact, that construction is paused until 2026.) According to Korean news reports, moreover, “at least 22 other factory sites involving Korean business groups, in autos, shipbuilding, steel and electrical equipment, have been nearly halted.” The raid and ICE’s subsequent abuse of the Korean workers have fueled a huge public backlash in Korea and, as several educated observers speculate, could discourage future Korean investment in the United States more broadly.
Exactly the opposite, in other words, of what an “investment accelerator” should do.
Indeed, the Trump administration itself seems to understand these risks and the damage the raid—and, by extension, restrictive and complicated U.S. immigration law—has already done. The detainees’ release, for example, was delayed because Trump offered to let the Koreans return to Georgia to keep construction moving—an offer all but one refused. (Just the kind of preferential treatment the law foments, by the way.) The State Department had its second-in-command publicly “express deep regret over the occurrence of this situation,” hope that the situation will be “a turning point to improve the system and strengthen Korea-U.S. relations,” and reiterate that the U.S. highly values Korean manufacturing investment. President Trump himself then took to Truth Social to explain why he wants and welcomes foreign companies “building extremely complex products, machines, and other ‘things’” bringing in their own specialists: because without such an arrangement, “all of that massive Investment will never come in the first place.” The Trump administration has even established a joint “visa working group” with South Korea, “with discussions said to include Seoul’s desire for a separate U.S. visa quota for its workers.”
Maybe—just maybe—the U.S. government should have considered this stuff before the subsidized investments and ICE raids got rolling.
The Perils of Zero-Sum Thinking
Finally, the entire episode is yet another warning against the type of zero-sum thinking that pervades our modern political discourse and, unfortunately, has been increasingly adopted by younger generations in the United States. As we’ve discussed, research overwhelmingly demonstrates that skilled immigrants are linked to increased wages and stable or expanding employment for native-born U.S. workers. In one very recent study, skilled immigrants were found to have raised the wages of less-educated native workers by around 2 to 3 percent from 2000 to 2019, while other studies have shown that reductions in skilled immigration did not boost native born employment (and in fact may have led to job losses). These gains are achieved via several channels—specialization, complementarity, entrepreneurship, innovation, agglomeration, tax revenues, etc.—but they all point to the same general conclusion: Skilled foreign workers usually support, rather than displace, their native-born American counterparts.
The LG/Hyundai plant shows this positive-sum outcome in practice: By the Koreans’ accounting, the detained workers were engaged in temporary, specialized work that complemented construction activities undertaken by (mostly) local workers. Even if the Korean workers actually were displacing American technicians, however, the same positive-sum conclusion would hold. That’s because the factory that those foreigners were building over the course of several months will eventually require the long-term employment of some 8,000 individuals, almost all of whom will be Americans. And the economic activity that the Korean-owned facility generates—activity, again, effectuated by those Korean technicians—will support lots of other local companies and jobs, too.
To ritualistically oppose the facility’s construction and praise the ICE raid because not everyone there was a native-born American, because some of them might be displacing Americans, or because the Koreans’ paperwork was (maybe) wrong denies this positive-sum reality—as well as the dynamic nature of the U.S. economy and the broader gains that immigration and trade often produce. It’s a reality that even our notoriously zero-sum President seems to get.
If only his most ardent supporters would get it too.
Chart(s) of the Week
