As predicted, Trump’s deportation policies are damaging US economy
The U.S. economy already is showing signs of stress due to President Donald Trump’s deportation and border policies, new economic research shows.
“Although current deportations are only now ramping up to the levels threatened during the 2024 presidential campaign, over the last few months we have started to see both widespread anecdotal reports and verifiable warning signs in the data that the economic harms predicted are being realized,” according to “Warning Signs of the Economic Harms from Deportations,” a paper published Aug. 12 by the Social Science Research Network.
Economists Michael Ettlinger of the University of New Hampshire, Robert Lynch of Washington College and Emma Sifre of the Institute on Taxation and Economic Policy also warned the administration’s militarized lockdown of the U.S.-Mexico border is exacerbating the situation.
“One reason economic harm started before significantly expanded deportations is that the substantial border restrictions imposed earlier have been reducing the inflow of immigrant workers,” they write. “The cycling of immigrants leaving the country being replaced in the workforce by others coming in has been disrupted.”
Industry experts are also reporting negative impacts from unauthorized and authorized immigrants alike being reluctant to go to work for fear of arrest, detention and deportation by Immigration and Customs Enforcement, the study found.
As a result, the loss of immigrant laborers is expected to result in nationwide production shortfalls and business failures: “These, in turn, will lead to lost jobs and stagnating wages for native-born workers, shortages of goods and services and price increases.”
Initially, the impact will become clearest in sectors that rely heavily on migrant labor, including construction, agriculture and leisure and hospitality, the paper explains.
In fact, states with higher concentrations of unauthorized immigrant construction workers already are seeing the effects of deportation.
Alabama, California, Florida, Mississippi, Washington and California have reported reductions in production and the slowing down or shutting down of projects due to losing migrant workers. Those and several other states saw construction employment drop by 0.1% from June 2024 to June 2025.
Ettinger, Sifre, Lynch
“Although building permit data are only available by region, it is striking that the issuance of residential building permits — a possible indication of investor and builder confidence that workers will be available to build buildings — are significantly down in the regions with a higher share of unauthorized workers but up in the region with the lowest share of unauthorized workers,” the authors explain.
Declines in the issuance of residential building permits during that 12-month stretch were greatest in regions where undocumented immigrants comprised at least 4.9% of construction workforces, including a 17% drop in permits in the Northeast, 4% in the West and 3% in the South, according to the paper.
“These changes, should they continue and grow as has been forecast in the event of growing levels of deportations, will result in a worsening of the housing shortage and rising housing costs as well as rising costs for any sector that relies on construction and construction workers,” the researchers explain.
The signs of economic decay are just as troubling in the agricultural sector where unauthorized migrants comprise 42% of hired crop farmworkers and at least 25% of all agricultural workers in the nation.
“In California, immigration raids are depleting the agricultural workforce and leaving crops unharvested.”
“In California, immigration raids are depleting the agricultural workforce and leaving crops unharvested, leading to estimates that the state will lose billions of dollars in production. From New Mexico to Washington to New York to Texas and other states across the country ICE raids have scared off farm workers and damaged farming enterprises,” the report says.
Agricultural employment fell 6.5% between March and July, representing about 155,000 jobs. The cost of fresh vegetable costs rose 2%, and beef and pork prices rose 1.9% from April to July.
The trends in employment and prices “are warning signs that we may be experiencing the predicted economic harms from the changes in immigration policy,” the paper states.
The leisure and hospitality industry also is taking a hit from the Trump administration’s immigration policies, the authors say. About 7% of the sector’s workforce is made up of undocumented immigrants and about 1 million positions were unfilled as of April of this year.
The continued loss of food services, entertainment, recreation, lodging and domestic workers through detention and deportation would be noticeably detrimental to the nation’s economy, the trio say. “Although it may be too soon to see these labor market impacts reflected in consumer prices, the cost of food away from home went up by an annual rate of 4.1% from April to July, and full-service meals, such as at restaurants, went up at an annual rate of 5.3% — which may be the beginning of a trend which would be an expected outcome.”
Together with the loss of 1.2 million foreign-born people from the overall labor force, struggles of the construction, agricultural and leisure and hospitality industries should serve as a wake-up call to Americans of things to come, they warn.
“If deportation numbers continue to stay at high levels or further accelerate, we also expect that national data will increasingly reflect economic injury from the policy, such as slowdowns in economic growth, higher unemployment rates, declines in business formation and broadly rising prices.”