Is Korea pulling back American investments? If so, why?

 

The situation regarding South Korean investment in the U.S. is currently a mix of heavy strategic commitment alongside significant tactical delays. While Korea is not broadly "pulling back," several high-profile projects have stalled or been reconsidered due to specific regulatory, economic, and geopolitical pressures. 

Current Status of Investments

• Major Commitment: South Korea recently moved to finalize a $350 billion bilateral trade agreement with the U.S..
• Project Delays: Implementation of these projects is unlikely to begin in earnest until at least the second half of 2026.
• Local Stalling: At least 22 factory sites in sectors like autos, shipbuilding, and steel have reportedly seen work nearly halted as of early 2026. 

Why Some Investments Are Stalling

• Enforcement & Raids: A major immigration raid at a Hyundai battery plant in Georgia in late 2025 resulted in the arrest of hundreds of Korean workers.
  • This led several Korean firms to pause or pull U.S. projects over fears of further raids and "criminal treatment" of their staff.
• Visa and Labor Issues: The South Korean Prime Minister stated that U.S. projects will remain "in limbo" until visa issues for specialized Korean workers are resolved.
• Economic Pressures:
  • Currency Weakness: The Korean won has depreciated to record lows against the dollar, making large-scale U.S. dollar outflows difficult to manage.
  • Market Slowdown: A slump in the electric vehicle (EV) industry led major battery makers like LG Energy Solution, SK On, and Samsung SDI to post heavy losses in 2025.
• Tariff Threats: The South Korean legislature has been racing to pass a "Special Act on Investment in the U.S." to avoid threatened U.S. tariff hikes (from 15% to 25%) triggered by delays in the investment rollout. 

Strategic Pivots

Rather than fully withdrawing, many Korean firms are repurposing their U.S. investments: 

• EV to ESS: Companies are converting U.S. EV battery production lines into Energy Storage Systems (ESS) lines to capitalize on the growing American grid-storage market.
• Supply Chain De-risking: Firms are actively trying to build non-Chinese supply chains for materials like LFP cathodes to remain compliant with U.S. trade regulations.