Washington, DC — A New York Times story by Lydia DePillis, “Trump’s Immigration Plans Could Bring an Economic Toll,” is the latest reminder about the economic turmoil that will result from Donald Trump’s planned mass deportations and immigration restrictions.
According to Douglas Rivlin, Senior Director of Communication for America’s Voice:
“The cruelty and human toll that will come from unsparing and indiscriminate mass deportations will be incalculable, but we likely will be able to quantify the economic costs of Donald Trump’s promised mass deportations. Let’s be clear: Trump’s mass deportation agenda will act as a wrecking ball for working families.
The Trump team’s signature economic policy of mass deportation will hit every American, including millions of Trump voters, spiking inflation, driving up deficits, cutting revenues and shrinking GDP and employment. It will no doubt wreak havoc on specific industries, but the ripple effects will be felt in every corner of the American economy.
Meanwhile, their plans to slash legal immigration alongside their mass deportations will be a one-two punch to the American economy. One thing we learned from the post-pandemic recovery is that cutting legal immigration costs American jobs and facilitating immigration – especially legal immigration – creates American jobs. Trump – driven by nativism and not economics – proposes taking a hatchet to precisely the ingredients that helped tame inflation without the ‘hard-landing’ recession and unemployment that many had predicted. His enmity towards foreigners threatens to cost American working men and women dearly.”
Find key excerpts from the New York Times story below:
“The wave of migrants who arrived during the Biden administration fueled some of the anger that propelled Donald J. Trump back to power. They also offset a labor shortage, putting a damper on inflation. With the next administration vowing to seal the border and carry out the largest deportation program in American history, those economic forces could reverse — depending on the degree to which Mr. Trump can fulfill those promises
… if Mr. Trump accomplishes anything close to what he has pledged, many economists expect higher prices on goods and services and possibly lower employment rates for American workers.
‘That gargantuan shock will cost trillions of dollars in economic growth, eliminating hundreds of thousands of jobs held by U.S. natives,’ said Michael Clemens, an economics professor at George Mason University who focuses on migration. ‘It will quickly raise inflation, by reducing the capacity of U.S. firms to supply goods and services faster than it reduces demand.’”
There’s plenty of precedent for this projection. You could start with the past eight years: A slowdown in immigration during the first Trump administration and a full hiatus over the pandemic created a shortfall of workers. That was part of what allowed prices to jump in 2021 and 2022, both by driving up wages and by limiting the supply of goods and services, according to officials at the Federal Reserve and other analysts.
In 2023, a bounceback in legal immigration as well as a surge in border arrivals — largely driven by economic crises and wars abroad — eased the labor market pressure that had boiled over into inflation, allowing price growth to recede without widespread layoffs. The Congressional Budget Office has also estimated that this period of elevated immigration reduced projected deficits, since the new arrivals pay taxes and are eligible for fewer public benefits.
Additional Economic Resources
- Nobel economist New York Times columnist Paul Krugman noted in his recent column that voters who were animated by inflation concerns will see their grocery bills rise further because of Trump’s mass deportations.
- An American Immigration Council report on the costs of mass deportation finds it would cause GDP to drop by 4.2-6.8%, which is more than the Great Recession (see here).
- Congressional Budget Office, Effects of the Immigration Surge on the Federal Budget and the Economy, July 2024
- Fed Chairman Jerome H. Powell: “Inflation and the Labor Market,” Talk at the Hutchins Center on Fiscal and Monetary Policy, Brookings Institution, November 2022)
- “Michael Clemens: Immigration policy in crisis,” Prof. Michael Clemons, Dept. of Economics, George Mason University, Remarks to the Peterson Institute of International Economics, June 2024
- Also read The Boston Globe op-ed from leading expert Michael Ettlinger, “Trump’s plan to vaporize the economy” and find related economic analyses: “Literature Review on the Economic Consequences of the Deportation of Unauthorized Immigrants,” by Robert G. Lynch (Washington College – Department of Economics) and Michael Ettlinger (University of New Hampshire) and “The Economic Impact on Citizens and Authorized Immigrants of Mass Deportation” by Robert Lynch and Michael Ettlinger.
