What comes next under Trump?
Now, the question is how far Trump will go with his own immigration policies, which could greatly hasten labor market tightening. Labor force participation rates have already declined somewhat, perhaps reflecting a decision by some workers to lie low amid the threat of increased government scrutiny. In addition, migrant encounters with the US Border Patrol at the southwest US border have fallen sharply.
With roughly 11 – 14 million undocumented immigrants in the US (about 5% – 7% of the labor force), it would be a significant logistical and resource challenge for the Trump administration to quickly follow through on the promised large-scale deportations.1 Still, of the 7 – 10 million recent entrants and some earlier undocumented immigrants, it’s estimated that as many as three million could end up leaving the US over the next few years. Many entered on temporary parole (e.g., through humanitarian parole programs that applied to certain countries and are now under fire from the new administration) or on condition of a “notice to appear” at an immigration court. History suggests more than half of these asylum seekers will be denied in court (though backlogs can create a wait of as long as six years for a hearing) and the Trump administration is likely to take a tough stance on those who are denied.
As he did in 2019, Trump has declared an emergency at the US/Mexico border. He has also directed the Department of Homeland Security to expand the use of so-called expedited deportations and reinstated the “Remain in Mexico” policy, which encourages those seeking asylum to stay in Mexico until their case is adjudicated (Mexico would have to agree). Not all of Trump’s policies in such areas succeeded in his first term, and it is likely that courts will hold up some of the orders he’s issued in the early days of this second term. Still, there is little doubt the change in administration will impede immigration.
Even in the skilled immigration space, which has some supporters within the Trump administration, students and other immigrants from certain countries (e.g., China) may face greater scrutiny, at least in the early going (similar policies were contested in Trump’s first term). This may mean that companies seeking to address a shortage in skilled labor will be likely to increase the use of offshoring, which could spill over into slower US growth.
