The Trump administration’s curbs on immigration and ramped-up deportations will lower US 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 points 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 different 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 US-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.
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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 US 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.
