Will Trump's immigration policy backfire?

Source: Barren Chinese

Economists believe that a large-scale eviction plan will bring about a ‘supply shock’, exacerbate the pressure of pump prices, and make the employment situation of ordinary Americans even worse.

Trump promised to drop prices during his campaign, but if his two main policy proposals are implemented, it could actually have the opposite effect.

Trump’s proposed tariff policy has been seen as likely to raise prices, and economists warn that his second signature policy - the plan to deport millions of illegal immigrants from the United States - could also push up prices.

Economists believe that a large-scale immigration expulsion plan would disrupt industries relying on immigrant labor, including agriculture and construction, causing issues such as labor shortages and production slowdowns, and ultimately leading to increased prices for food, housing, and other goods.

Neil Shearing, chief economist at Capital Economics, wrote in a report on Monday (November 18th): ‘Tariffs are not the real threat. The impact of other countries and regions following Trump’s trade policy during his second term will be the real impact on the US economy. What will truly impact the US economy is Trump’s stance on immigration.’

What impact will Trump’s large-scale immigration eviction plan have on the US economy?

Trump previously stated that he would deport millions of illegal immigrants living in various parts of the United States based on the Alien Enemies Act passed in 1798.

Trump said his plan could involve up to 15-20 million people, however, according to the Center for Migration Studies, as of July 2023, there are only about 12 million illegal immigrants in the United States.

The year with the highest number of deportations in a single year was about 430,000 during Obama’s presidency in 2013.

Research shows that the proportion of undocumented immigrants in the US labor force is slightly less than 5%. However, if they are deported, many other workers will also be affected.

Economist Chloe East of the University of Colorado Denver studied the impact of the deportation actions of the Obama and Bush administrations on the US labor market. Her research found that for every 500,000 illegal immigrants leaving the labor market, there would be a reduction of 40,000 job opportunities for Americans.

Easter said this is because when undocumented immigrants are excluded from the labor market, it is difficult for employers in industries such as construction, agriculture, hotels, and child care to fill the gaps in low-wage and less attractive positions. As a result, the demand for other types of positions will also decrease.

“Mass evictions will make the employment situation even worse for ordinary Americans,” East said. ”

Some advocates of reducing immigration numbers have countered the argument that ‘employers struggle to find American workers to fill low-wage positions typically held by foreign workers,’ but Easter points out that in her research, ‘we have not seen any evidence that employers are able to attract U.S.-born workers to these positions’.

In the past year, a wave of new immigrants has driven a rise in employment in the United States. Despite the possibility of higher interest rates slowing down hiring and increasing unemployment rates, the U.S. job market continues to maintain strong momentum.

Madeline Zavodny, an economist at the University of North Florida who studies immigration-related economic issues, said, “Without these immigrants, the U.S. job market wouldn’t have risen like this.” ”

Zavotny pointed out that the immigration wave, including both legal and illegal immigrants, has alleviated the labor shortage problem in the United States in recent years and prevented further pump in prices. She said, ‘If it weren’t for these immigrants, the pressure of price pump in the United States would be even greater.’

What are the potential benefits of mass eviction?

Some policy experts believe that the vacancies left by large-scale evictions will flow to Americans who need jobs, including eligible males without a college education. Over the past few decades, the labor force participation rate of this group has been declining.

Steven Camarota, director of research at the Center for Immigration Studies, said, “Employers will have to raise wages, change their recruitment methods, and hope that more men like this can find jobs.”

In addition, Kamarota does not believe that large-scale deportations would seriously disrupt the vast U.S. labor market.

He said, “There are 168 million labor force in the United States, and I don’t think it will make much of a difference to let millions of illegal immigrants leave. There are always people coming and going in the labor market.”

Will Trump’s large-scale eviction plan cause prices to pump?

However, an increasing number of economists have raised the opposite warning that Trump’s immigration plan is highly destructive and will further raise the prices of consumer goods that have already put pressure on many Americans.

If too many workers are lost to industries such as agriculture and construction, farms and residential builders will struggle to maintain production. Some affected industries, including agriculture and childcare, have already begun to address the issue of labor shortages.

Esther said that labor outflows could push up prices of commodities such as groceries, housing, and daycare. If there is a significant reduction in agricultural and construction workers, food prices will pump, and housing prices will also pump.

A paper published by the Peterson Institute for International Economics in September pointed out that large-scale evictions ‘will trigger a typical supply shock, that is, a pump in prices and a decline in output’.

Some experts believe that these industries may not be greatly affected. Adam Speck, agricultural economist at data analysis company Croptell, believes that labor shortages are not one of the biggest risks facing the Trump administration.

In the agricultural sector, the H-2A visa program allows farmers to temporarily hire foreign workers. Speck pointed out that expanding the program can offset the impact of the immigration deportation plan.

Spike said, “Trump knows he needs to build a good relationship with farmers.”

The impact of Trump’s immigration agenda will depend on how effectively the government implements his plans.

Trump promised to launch a deportation plan on his first day as president, but an analysis report by the American Immigration Council shows that the current immigration enforcement system does not have the capacity to carry out such a large-scale operation, which may cost 100s of billions of dollars. The American Immigration Council is a non-profit advocacy organization opposed to mass deportation.

On Monday, Trump posted on Truth Social that he will announce the United States entering a state of emergency and deploy the US military for eviction.

If Trump really does this, his immigration policy will be the largest of its kind in decades, but Zavoni said it would not help Trump fulfill his promise to drop prices.

She said, “Driving away a large number of immigrants will not drop the price, I hope more people can understand this.”