The aggressive immigration measures implemented by the Trump administration are causing a significant decline in both legal and undocumented immigration. Contrary to what some may believe, this is not good news for the economy, according to an analysis by the Federal Reserve Bank of Dallas, Texas. Economists warn that reduced immigration could subtract up to one percentage point from the nation’s annual Gross Domestic Product (GDP) growth.
Boom and Bust of Immigration Flows
From 2021 to 2024, the United States experienced a historic surge in undocumented immigration. The Congressional Budget Office (CBO) estimated that 7.3 million unauthorized immigrants entered the country during that period — a figure far above the pre-pandemic annual average of 100,000.
Many of these new immigrants received temporary work permits, which allowed them to contribute to the labor force and consumer demand immediately.
Everything changed with the arrival of the Trump administration and new legal restrictions, which reduced entries across the southern border. By March 2025, the monthly flow of unauthorized immigrants had dropped 82% compared to December 2024, falling from 105,000 to 19,000.
Why Does Immigration Affect GDP?
To maintain a stable population — without excessive growth or decline — the average family needs to have about 2.1 children. This ensures a steady labor force and the sustainability of tax-funded programs such as Social Security.
In the U.S., total fertility began dropping below this replacement level decades ago, and after 2007, fertility rates plummeted to a historic low of around 1.6 children per woman.
The Role of Immigrants in Labor Force Growth
The Dallas Fed study explains that much of the country’s recent employment and population growth has come from immigration. A larger workforce drives production of goods and services, domestic consumption, housing demand, and other key sectors.
It’s no secret that undocumented immigrants often fill physically demanding jobs in industries like construction, agriculture, and service.
What Happens to the Economy When Immigration Declines?
The recently passed legislative package from President Trump allocates $170 billion to fund raids and mass deportations, militarize the border, and increase the costs of various immigration procedures. As a result, the immigration flow is expected to continue declining. The study modeled five potential scenarios and their projected impacts on the 2025 GDP:
| Scenario | Details | Effect on 2025 GDP |
| Baseline environment | Deportations continue at the current rate: 87,500 per year. | -0.81% |
| High deportation | Deportations rise to 437,500 per year. | -0.83% |
| Self-deportation | Half a million immigrants with TPS leave voluntarily. | -1.01% |
| Mass deportation | Up to one million deportations annually. | -0.89% |
| No interior deportations | Only a reduction in border entries. | -0.75% |
This study is not the only one warning about the economic consequences of restricting immigration. The Peterson Institute for International Economics estimated that the mass deportation of 1.3 million undocumented workers would reduce real GDP by 2.7% between 2025 and 2028.
Anti-Immigrant Policies Affect Us All
The academic consensus is clear: Immigration — even unauthorized immigration — sustains key sectors of the economy. A sharp decline in migration flows, particularly during periods of low demographic growth, will have adverse consequences for production and employment. In addition to the painful human toll of separating families, it will increase the cost of living for everyone, even for those who support these heartless policies.
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