Economic Impact of Trump's Immigration Policy
President-elect Donald Trump has outlined a stringent immigration crackdown set to commence upon assuming office. Trump asserts that tough immigration measures are crucial for bolstering national security and preserving job prospects for American workers. His plan includes curbing illegal immigration, strengthening border security, imposing restrictions on immigration from specific countries, and targeting the employment of undocumented workers.
Trump has appointed Tom Homan, the former U.S. Immigration and Customs Enforcement director from his first term, as "border czar" to spearhead these initiatives.
Analysts warn that immigration policies may weigh on GDP and inflation. Research by the American Immigration Council suggests the immigration plan could reduce US GDP by $1.1 trillion to $1.7 trillion.
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Trump plans to declare a national emergency to deploy the military for the mass detention of illegal immigrants, who would be held in "massive detention facilities." Since the election day, private prison firms $Geo Group Inc(GEO)$ and $CoreCivic, Inc(CXW)$ have surged 97.6% and 67.8% respectively.
Conversely, sectors such as agriculture, landscaping, construction, and hospitality could suffer.
According to the Pew Research Center, immigrants comprise 13.7% of the U.S. population as of 2023, playing a vital role in filling low-wage, labor-intensive positions that often do not attract native-born workers.
A recent Goldman Sachs report highlighted that undocumented immigrants account for approximately 4.4% of the workforce, with even higher concentrations in sectors like landscaping and private home services (20%), crop agriculture (17%), food processing (15%), and construction (13%).
The U.S. Department of Labor indicates that about two-thirds of U.S. farm workers are foreign-born, with 42% lacking legal work permits.
In sectors heavily reliant on immigrant labor, mass deportations could trigger severe labor shortages, compelling companies to raise wages to offset the loss of undocumented workers. Goldman Sachs estimates that undocumented workers earn roughly 20% less per hour than their U.S.-born legal immigrant counterparts in similar roles.
Additionally, the tech sector may also feel the impact, as it employs a substantial number of highly educated legal immigrants. During Trump's previous administration, obtaining and renewing visas for high-skilled foreign workers became significantly more challenging.
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