Since taking office in January 2025, President Donald Trump has implemented an aggressive immigration enforcement strategy that is creating significant ripple effects throughout the American economy. While the administration frames these policies as necessary for border security and protecting American workers, economists and industry leaders are warning of mounting economic consequences that could affect both workers and consumers.
Trump’s immigration enforcement represents what he has described as an “unprecedented” crackdown targeting an estimated 11 million undocumented immigrants across the United States. Workplace immigration raids, a policy that had been discontinued, have been restarted. The administration has expanded its enforcement actions beyond traditional deportations to include broader travel restrictions and policy changes affecting various immigrant populations.
The economic impact is becoming apparent across multiple sectors, with construction and agriculture bearing the brunt of the enforcement actions. “Immigration actions could potentially deepen workforce shortages, drive up costs, and create serious financial risks for contractors,” the Bank of America report said. The construction industry, where approximately 34% of workers are foreign-born, is experiencing particular strain.
In states like Arizona, the impact is already measurable. One in five agricultural workers and one in eight construction workers in Arizona lack permanent legal status, according to Pew Research Centre data. This concentration of undocumented workers in critical industries means that enforcement actions create immediate gaps in the workforce that are difficult to fill quickly.
The agricultural sector faces perhaps the most severe challenges. About 25% of U.S. farm workers and 19% of maintenance/construction workers are undocumented, and Trump’s plan to deport millions of migrants could uproot the two industries’ workforce.
Leading economic institutions have begun quantifying the potential costs of the administration’s immigration policies. The Brookings Institution projects significant GDP losses, estimating that immigration policy under the Trump administration will reduce 2025 GDP growth by between 0.1 (“high” scenario) and 0.4 percentage points (“low” scenario), or by $30 to $110 billion.
The Penn Wharton Budget Model has produced even more stark warnings about long-term consequences. Their analysis suggests that Trump’s policy of mass deportations would shrink most worker pay checks, erode gross domestic product (GDP), and spike the already-massive federal government budget deficit. The model indicates that high-skilled workers would suffer a $2,764 loss in annual wages on average if the immigration crackdown spanned 10 years.
The construction sector is experiencing immediate effects from the enforcement campaign. Trump deportations send construction workers ‘back to the shadows’ as undocumented workers avoid job sites and construction projects face delays. Industry leaders, including BlackRock CEO Larry Fink, have warned that the deportations will have a severe impact on agriculture and construction… This could cause a labour shortage that results in higher prices.
The agricultural implications extend beyond farm labour to the entire food supply chain. Undocumented immigrants make up a critical portion of the agricultural workforce, so mass deportations could lead to serious shortages of farm labour, especially given the limitations of the H-2A visa program and the challenges in attracting American workers to agricultural jobs.
Regional agricultural economies are particularly vulnerable. If President Donald Trump follows through on his threat to deport millions of immigrants, it could upend the economies of states where farming and other food-related industries are crucial.
The Economic Policy Institute projects that the employment effects will extend beyond immigrant workers themselves. If the Trump administration deports 4 million people over four years (increasing total deportations above baseline by 2,680,000), immigrant employment will fall by about 3.3 million. The analysis indicates that both immigrant and U.S.-born workers would suffer job losses, particularly in construction and child care sectors.
Oxford Economics notes a fundamental economic principle at work: There will be fewer workers to produce goods and services, slowing down growth and putting pressure on wages. This reduction in the labour force creates inflationary pressures that could affect consumer prices across multiple sectors. Also, fewer jobs and economic activities will lead to reduced consumer spending, entrepreneurship, and tax revenues to the government.
Recognizing the potential economic disruption, behind the scenes, senior Trump officials and the president himself have grappled with the consequences of that crackdown against a key portion of the workforce: migrant workers. However, the administration has continued to prioritize enforcement over economic considerations.
Early indicators suggest that enforcement actions are having their intended deterrent effect, with net immigration starting to fall this summer even before many policies have been fully implemented. This reduction in immigration flows compounds the labour shortage issues in affected industries.
Public sentiment regarding the economic impact remains divided. Pew Research Centre polling shows that more say these policies will make the U.S. economy weaker (46%) rather than stronger (34%). About two-in-ten (19%) say they won’t have much impact on the economy. This division reflects broader partisan disagreements about immigration policy and its economic effects.
As the Trump administration continues its enforcement campaign, the economic consequences are likely to become more pronounced. “In a situation in which there are going to be many more Americans retiring, more immigration would really benefit the labour market and the growth in the economy,” Peri said. This demographic reality adds another dimension to the economic challenges posed by reduced immigration.
The administration’s policies represent a significant test of competing economic theories about immigration’s impact on wages and employment. While some argue that reduced immigration will benefit American workers by tightening labour markets, the emerging data suggests that higher wholesale vegetable costs and an economic slowdown in Texas could be signs that Trump’s immigration policies are hurting industries.
The ultimate economic impact will depend on several factors: the scale and pace of enforcement actions, the ability of industries to adapt through mechanization or wage increases to attract domestic workers, and the broader macroeconomic environment. What is clear is that Trump’s aggressive immigration enforcement is reshaping American labour markets in ways that will have lasting economic consequences for workers, businesses, and consumers alike.
As these policies continue to unfold, monitoring their economic effects will be crucial for understanding both their immediate costs and their longer-term implications for American economic competitiveness and growth. While the U.S government has the legal right to go after and deport undocumented immigrants, the reality is that they play a significant role in the U.S economy, and deporting them en masse will amount to throwing the baby out with the bathwater. It is rife that the Trump administration should rethink this policy.
Oshobi, a development economist, management consultant, and author, writes from Lagos, Nigeria