Trump's Mass Deportation Plan: A Recipe for Inflation and Economic Uncertainty

As Donald Trump prepares to assume the presidency for a second term, his plans for mass deportation have raised concerns about the potential impact on the U.S. economy, particularly in terms of inflation and economic uncertainty. Trump's proposal to deport millions of undocumented immigrants could have significant consequences for the labor market, consumer prices, and international trade.



Labor shortages and increased wages

Mass deportation would lead to a sudden and substantial reduction in the workforce, particularly in sectors where undocumented immigrants are concentrated, such as construction, child care, and elder care. This would result in labor shortages, making it difficult for businesses to maintain their current operations and meet demand. (Source: Khanna, Shantanu, assistant professor of economics at Northeastern University)

With fewer workers available, employers would need to raise wages to attract and retain employees, leading to increased labor costs. This would likely be passed on to consumers in the form of higher prices. (Source: Simon, Peter, teaching professor of economics at Northeastern University)

Disruptions in supply chains

The sudden departure of workers could disrupt supply chains, leading to shortages of goods and services, and potentially driving up prices. (Source: Venkatesan, Madhavi, assistant teaching professor of economics at Northeastern University)

Reduced economic growth and increased inflation

The loss of workers would lead to a decrease in productivity and economic growth, as fewer people would be available to contribute to the economy. (Source: Khanna, Shantanu) Mass deportation could also lead to higher inflation, as the reduced labor force would put upward pressure on wages and prices. (Source: Haworth, Rob, senior investment strategy director with U.S. Bank Asset Management)



Potential recession

The combination of labor shortages, increased wages, and disrupted supply chains could lead to a recession, as businesses struggle to adapt to the new economic reality. (Source: Northeastern experts)

Industries most affected

Mass deportation would significantly impact industries that rely heavily on undocumented immigrant labor. These industries include construction, agriculture, hospitality and tourism, child care, and elder care. Stock prices in these sectors could react negatively in the short term due to increased operational costs, potential labor shortages, and uncertainty. (Source: Northeastern experts)



U.S. dollar and international trade

Trump's immigration policies could have complex and multifaceted effects on the U.S. dollar's value and international trade. While some factors may appreciate the dollar, others could lead to depreciation. The ultimate impact will depend on the specific policies implemented and how the market reacts to them. (Source: Trump, 2024; Simon, 2025; Khanna, 2025; Hainlin, 2025)

In conclusion, Trump's mass deportation plan could have significant short-term and long-term impacts on the U.S. economy, particularly in terms of inflation and economic uncertainty. The sudden reduction in the workforce would lead to labor shortages, increased wages, and disruptions in supply chains, driving up prices in the short term. In the long term, reduced economic growth, increased inflation, and the potential for a recession could further exacerbate these issues. The industries most affected by mass deportation would likely experience negative stock price reactions in the short term, while the U.S. dollar's value and international trade could be influenced by a complex interplay of factors.