Trump's Immigration Crackdown Slows U.S. Job Growth by 50,000 Jobs Monthly

President Donald Trump's aggressive immigration crackdown, estimated to cost $150 billion, is significantly reducing the number of foreign-born workers in the U.S. labor market. For the third consecutive month, the foreign-born labor force has decreased, despite the U.S. adding 147,000 jobs in June. This trend is directly linked to Trump's legislative efforts, which include increased border enforcement, more deportations, and additional funding for detention centers.

The White House maintains that native-born workers will fill the gaps left by departing foreign-born workers. Stephen Miran, Chair of Trump’s Council of Economic Advisers, argues that there is a substantial pool of unemployed Americans ready to enter the workforce if the right incentives are provided. He points to new tax cuts on overtime and stricter rules for Medicaid recipients as potential tools to drive these workers back into jobs. However, many economists disagree with this assessment.

Daniel Zhao, a senior economist, warns that if the job market slows, economic growth will follow suit. He, along with other economists, argues that the current U.S. workforce, particularly native-born workers, cannot fully replace the gap left by missing immigrant labor. Federal Reserve Chair Jerome Powell echoed this concern, stating that slowing the growth of the labor force will inevitably slow economic growth.

The long-term implications of this trend are concerning. A report from Deutsche Bank suggests that the "breakeven rate" of job growth could fall to 50,000 jobs a month, significantly lower than the levels seen during Joe Biden’s presidency when immigrant labor was on the rise. If job creation stalls at this rate, it would result in slower GDP growth. Trump has attributed the labor gains under Biden to an "unchecked flow of undocumented immigrants," leading to a doubling down on deportations.

Trump's immigration czar, Tom Homan, has emphasized the need for more agents, detention beds, and transportation contracts to expedite deportations. Despite these efforts, the sharp drop in migrant encounters at the southwest border indicates that the labor pipeline is drying up. The Congressional Budget Office has also warned that slowing immigration could weaken long-term economic output, even if it slightly boosts wages. A 2024 CBO report highlighted that the immigration surge post-pandemic had a positive effect on economic growth without significantly impacting inflation.

A study by the American Enterprise Institute cautioned that if net migration flatlines in 2025, it could reduce GDP growth by 0.3 to 0.4 percentage points. This is a substantial hit, especially given the current economic slowdown. Trump has acknowledged concerns from farmers and hospitality business owners about finding workers under the new rules, as these industries heavily rely on foreign-born labor. Miran admitted that "weaker numbers" may appear temporarily but insists that once the changes take effect, more Americans will enter the workforce. Economists, however, view this as optimistic thinking.