President-elect Donald Trump’s strict immigration proposals, including a contentious mass deportation plan, could have negative economic consequences, according to some analysts. Sectors heavily dependent on foreign labor, such as agriculture and construction, are expected to be particularly affected.
Estimates suggest that approximately 11 million undocumented individuals reside in the United States, with the majority originating from Mexico.
In 2022, about 8.3 million undocumented individuals were part of the labor force, accounting for nearly five percent of the total workforce, according to a recent Pew Research Center estimate.
“Today our cities are flooded with illegal aliens,” Trump said on the campaign trail earlier this year, adding: “Americans are being squeezed out of the labor force and their jobs are taken.”
However, many of the sectors likely to be most severely impacted have historically faced challenges in attracting U.S. workers.
“The construction and agriculture industries would lose at least one in eight workers, while in hospitality, about one in 14 workers would be deported due to their undocumented status,” the non-profit American Immigration Council (AIC) said in a recent report on Trump’s deportation plans.
The deportations would affect “more than 30 percent” of plasterers, roofers, and painters, as well as a quarter of housekeeping cleaners, according to the report.
Economic Impact
A recent study conducted jointly by the American Enterprise Institute (AEI), Brookings Institution, and the Niskanen Center projected that Trump’s immigration policies could reduce U.S. GDP growth in 2025 by up to 0.4 percentage points.
This reduction in growth would largely result from the immediate impact of having fewer foreign workers contributing to the production of goods and services, alongside a smaller decrease in output driven by reduced consumer spending from those groups.
In such a scenario, the authors said, “legal immigration is slightly below where it was during the pre-pandemic Trump administration, while enforcement and deportation efforts reach levels not seen in recent decades.”
Under this projection, 3.2 million people would be deported during Trump’s term, with net migration—arrivals minus departures—declining from 3.3 million in 2024 to negative 740,000 in 2025, driven by a sharp increase in voluntary emigration.
In a more extreme scenario, deemed highly unlikely by analysts, the economic impact could be far greater.
A recent report by the Peterson Institute for International Economics modeled the effects of expelling all 8.3 million unauthorized immigrant workers. It estimated that by 2028, economic growth could fall 7.4 percent below baseline projections, effectively resulting in no net U.S. economic growth during a second Trump term solely due to this policy.
At the same time, inflation would rise by 3.5 percentage points by 2026, as employers increase wages to attract American workers.
Even in less drastic scenarios, analysts suggest that mass deportations could still drive up prices. Trump’s immigration policies “could lead to significant price increases in certain sectors of the economy and also contribute to inflation,” Michael Strain, director of economic policy studies at AEI, told AFP.
However, the overall impact on inflation would likely be modest, according to economists at Pantheon Macroeconomics. In an investor note, they explained that upward pressure in sectors like agriculture and construction would be partially offset by weaker demand elsewhere, particularly in housing, resulting in slower inflation in those areas.
Obstacles
Most experts believe that legal, logistical, and financial challenges will temper the most extreme proposals, as was the case during Trump’s first term. Ultimately, net migration is expected to decline modestly next year compared to pre-pandemic levels.
“We expect tighter policy to lower net immigration to 750k per year, moderately below the pre-pandemic average of 1 (million) per year,” economists at Goldman Sachs wrote in an investor note.
“We’re sceptical that the kind of deportations proposed on the campaign could occur,” Oxford Economics chief US economist Ryan Sweet wrote in a note to clients.
