Dramatic images of workers shackled at the ankles, wrists and waist during a raid by US Immigration and Customs Enforcement last week will have a chilling effect on foreign companies with operations, or plans to invest, in America. The detention of 475 workers, mostly South Korean nationals, at a battery plant being built by Hyundai and LG in Georgia, which involved helicopters, armoured vehicles and heavily armed agents, was clearly choreographed to send a message to Donald Trump’s base, and to shock international businesses into respecting US visa rules. Instead, the optics could backfire on the president’s plans to reinvigorate America’s manufacturing sector.
The alleged infringements at the Hyundai and LG site are yet to be clarified. Immigration lawyers say many of the arrests were of individuals who entered the US on B-1 visas, which allow entry to the US for business purposes but do not allow the holder to work for payment, as well as the Esta visa waiver system that facilitates short-term business visits for specific activities. Seoul-based executives and industrial groups told the Financial Times that given difficulties in gaining short-term worker visas, it was an “open secret” that South Korean companies and their subcontractors had routinely used other forms of visas for workers sent to build advanced manufacturing sites in the US.
It is only right that foreign companies abide by US visa rules, and that America enforces them. But even if ICE was targeting genuine illegal work in Georgia last week, the manner in which it did so will do more harm than good to Trump’s hopes of sparking a manufacturing boom.
The number of employed foreign workers in the US has already dropped by around 1.4mn since March, amid Trump’s broader mass deportation plans. After the arrests last week, multinational companies with foreign employees have also paused some travel to the country and sought legal advice, fearing they could be targeted by the ICE next. With large raids across the country making little distinction between those crossing the border entirely undocumented or on incorrect visas, foreign workers will be increasingly deterred from coming to America altogether. Investors will also think twice.
The US manufacturing and construction sectors are desperately short of workers. Few US workers are willing to do manual tasks on sites, and many lack the skills and expertise needed in today’s advanced sectors, such as semiconductor and battery making. This is why many global manufacturers — which have been pressured by Trump to expand in America — often prefer to use staff from their home country.
The administration could help train domestic workers, but that will take time, and it will also require some foreigners to do the training. Nor will this be sufficient in itself, given the scale of Trump’s manufacturing ambitions. A better approach would be to work with companies to help ensure staff stay within the law. That means ironing out ambiguities in the visa rules, speeding up visa approvals and renewals and developing more legal ways for necessary foreign workers to enter and stay in the country.
Economic activity in the US manufacturing sector contracted in August for the sixth consecutive month, according to the Institute for Supply Management. Much of the hit comes from more expensive inputs, driven by the president’s tariffs. An increasingly strained workforce will add insult to injury. The US president wants factories to sprout up around the country. He wants to use tariff threats to goad international companies into building them, and he wants to clamp down on foreign workers and generate more jobs for Americans. He cannot have all of these at the same time.