In recent months, the Trump administration has escalated its efforts to tighten immigration controls, echoing a key pledge from President Donald Trump’s campaign. This crackdown affects both undocumented immigrants and legal pathways, raising concerns about economic repercussions, labor shortages, and inflation.
Upon taking office in late January, President Trump wasted no time in implementing a series of immigration policies aimed at curbing illegal immigration. However, he has also taken significant steps to restrict legal immigration avenues, severely impacting asylum seekers at the US-Mexico border and canceling flights for refugees already vetted for entry into the US. This dual-pronged approach is aimed at appeasing the nationalist factions within his political base while addressing what he has termed the problem of immigration.
Over the years, Trump’s position on legal immigration has been paradoxical. Initially open to the idea of welcoming skilled immigrants, he has recently pushed policies that are expected to significantly decrease the influx of legal immigrants. A notable instance is his introduction of a “gold card” visa program targeted at high-net-worth individuals, demonstrating a selective approach to immigration. Experts are alarmed, asserting that these policies create an increasingly hostile environment for immigrants and could exacerbate labor shortages in critical sectors.
The implications are wide-reaching. As the US population ages and birth rates decline, industries such as healthcare, agriculture, and construction face urgent demands for workforce replenishment. With legal immigration expected to decline under Trump’s administration, many worry that these sectors will struggle to fill essential roles, subsequently leading to economic complications. Jorge Loweree, from the American Immigration Council, emphasized the dependency American industries have on immigrant labor, warning that Trump’s policies could produce significant adverse effects for workers and employers alike.
Reflecting on the immigration landscape, data from the Census Bureau illustrates a decline in legal immigration amidst pandemic restrictions but a subsequent rise, with approximately 2.8 million legal entries recorded in 2023. Yet, as experts predict, the current administration might continue on a path of restrictions, risking a decrease in legal immigration levels by nearly half by the year 2026.
The Allianz Trade anticipates that these ongoing restrictions may yield a subpar annualized GDP growth below 2% by 2026. Furthermore, projections by the Brookings Institution suggest that strict immigration regulations could reduce economic growth by as much as 0.4 percentage points this year if deportations occur at the levels Trump has suggested.
The economic contributions of immigrants are substantial: Approximately 47.8 million immigrants swelled the workforce in the US as of 2023, contributing $1.7 trillion in spending power and generating $652 billion in taxes. The potential risks posed by Trump’s immigration policies—a drastic reduction of legal immigration and aggressive deportation strategies—may ultimately hinder these sectors’ ability to thrive and spur inflation in essential markets like food, housing, and tourism.
Economists underline that robust immigration is vital for sustaining a healthy labor market, especially with a growing number of retirees. Giovanni Peri, from the University of California, Davis, noted that as the demographic landscape evolves, increased immigration is critical for economic growth. The challenges presented by Trump’s ongoing deportation plans and restrictions may lead to higher prices and effectively stifle the economic growth the administration seeks to achieve.