Trump Deportations Hitting US Economy Hard: GDP Down, Growth Halved

The White House campaign to deport as many as 1 million immigrants - including naturalized citizens historically viewed as legalized Americans - is starting to negatively impact the US economy. 

Growth is on a trajectory in 2025 to be half that of the two previous years and GDP is trending towards a decline of at least 1%, a significant number given the size of the US economy. Retail, construction, agriculture and manufacturing - all key elements of economic performance are among the industries most affected. JL

Catarina Saraiva reports in Bloomberg:

The Trump administration’s curbs on immigration and ramped-up deportations will lower U.S. economic growth by almost a full percentage point this year, according to a study from the Federal Reserve Bank of Dallas. Under a “mass deportation” scenario in which 1 million immigrants are removed per year by the end of 2027, annual GDP growth would be nearly 0.9 percentage point lower by the end of 2025, and 1.5 percentage points lower by the end of 2027. Economists expect U.S. growth to cool to a 1.5% pace in 2025, according to a Bloomberg survey, from close to 3% in each of the previous two years.

The Trump administration’s curbs on immigration and ramped-up deportations will lower U.S. economic growth by almost a full percentage point this year, according to a study from the Federal Reserve Bank of Dallas.

The drastic drop in immigrants across the southern border and increased efforts to deport more foreign-born workers could subtract about 0.8 percentage point from gross domestic product in 2025, according to an analysis by economists including Pia Orrenius.

The researchers – who acknowledged that the limited availability of historical data makes their findings highly uncertain – examined how five decreased immigration scenarios would impact GDP and inflation. They found the biggest hit would be to growth, with a slight increase to inflation this year from the new policies.

Immigration at the U.S.-Mexico border dropped sharply last year and continued to decline after President Donald Trump’s election. Trump has initiated a large-scale effort to deport undocumented immigrants and has encouraged people to leave by removing deportation protections for many foreign nationals.

Fewer border crossings – not deportations – are the biggest driver of the hit to growth, the researchers found, accounting for 93% of the projected GDP reduction.

Under a “mass deportation” scenario in which 1 million immigrants are removed per year by the end of 2027, annual GDP growth would be nearly 0.9 percentage point lower by the end of 2025, and 1.5 percentage points lower by the end of 2027, the researchers found.

Economists expect U.S. growth to cool to a 1.5% pace in 2025, according to a Bloomberg survey, from close to 3% in each of the previous two years.