President-elect Donald J. Trump has promised to crack down on both documented and undocumented immigration, and has vowed to implement the “largest domestic deportation operation in American history.”
Regardless of where you fall on the political spectrum, it’s impossible to ignore the facts: 1.5 million asylum applications were pending as of October, up by almost double from 2021. And it’s fair to say that many communities are struggling to support a surge of migrants.
Change seems to be finally coming, but are these the approaches that the US needs? I don’t think so.
The US has already tried stringent measures to limit immigration. These policies harmed the overall economy and didn't bring the intended benefits to US-born workers.
The US immigration system is still largely regulated by the provisions of the 1965 Immigration and Nationality Act, which was only marginally amended in 1990. Since then, proposals to reform the immigration system have been made, but they have all regularly failed.
How will Trump’s proposed policies affect the US economy in both the short and the long run? What can history teach us?
We have been here before
Since 2020, immigration has been key to sustaining the recovery of the US economy, filling vacancies in a tight labor market, and keeping inflation under control. While labor markets have somewhat cooled off since the peak in 2023, there is still significant demand for immigrant labor. Immigrants are unlikely to displace US-born workers, both in high-skilled and unskilled sectors.
The US has already tried stringent measures to limit immigration. These policies harmed the overall economy and didn't bring the intended benefits to US-born workers. In particular:
The Chinese Exclusion Act banned Chinese laborers from immigrating to the US in 1882. Contrary to its goals, the act slowed economic growth in the US West, where almost all Chinese immigrants lived at the time. The policy also hurt manufacturing output and lowered growth in income and labor supply of US-born workers, except for local white miners.
Country-specific quotas introduced in 1921 and 1924 drastically reduced immigration from Europe. Immigrants from Europe had fueled economic growth, often benefiting also US-born workers. After the quotas, the economy didn’t grow any faster, and US-born workers didn’t benefit from increased wages or job opportunities. Employers either switched to labor-saving technologies or hired workers from elsewhere, such as Canada or Mexico.
Short-term: Potential higher costs and job losses
Why would the changes under consideration now be any different? Trump’s proposed deportation plans may even take a bigger economic toll, not to mention the immeasurable human costs. We will likely see:
Employers struggling to find workers. Firms in many sectors, such as agriculture, hospitality, and health care, won’t be able to replace immigrant workers with US-born workers quickly.
High prices and inflation. Trump's plan will put upward pressure on wages. This may be good for some US-born workers but will drive up prices. At best, inflation and consumer costs will surge. At worst, many goods will disappear from the consumption basket of American families.
Job losses. Many US-born workers—including managers—will lose their jobs if companies can’t find workers to build their products and deliver their services. This will likely lead to firm closures and, in turn, job losses even among US-born workers.
Long-term: Lost growth and opportunities
It’s possible that, over time, the US economy will adjust to the new policies, and US-born workers will eventually earn higher wages. But there is no guarantee this will happen, and it’s unclear how long it will take. When you’re forced to close your business and lay off your staff because of chronic labor shortages, time horizons tend to shrink.
Would the economic pain be worth it? Again, history offers some clues:
The effects of the Chinese Exclusion Act persisted for at least 60 years. If anything, the economic damage grew over time.
Conversely, research shows that the positive effects of immigration on the economy are likely to compound over time.
America would be losing immigrants at a precarious time. Like those of other countries, the US population is aging fast. Without younger immigrants to support as caregivers and economic contributors, the US population will begin to decline quickly, and fiscal burdens linked to the welfare and pension systems will become unsustainable.
Perhaps even more worrying is the “spillover” effect that a crackdown on immigration might have: The US is an outlier in its ability to attract global talent. Will highly skilled people be willing to migrate to a country that becomes increasingly hostile to immigrants? I am not sure.
Once again, history suggests that immigration restrictions often have unintended consequences and reduce the inflow of immigrants who are not directly targeted and whose skills and talent are key for economic growth. People won’t go where they don’t feel welcome.
We need a better approach
US immigration policy needs a drastic change, but Trump's approaches won’t take America in the right direction. This doesn’t mean the US should move to a fully unrestricted immigration system. This wouldn’t be politically feasible or economically desirable.
However, deporting immigrant workers and other draconian measures could set America’s economy back, with ripple effects that would be felt by all.
