The cost of Trump tariffs and mass deportations
A multimedia project by
Isabelle Marceles and Sydney Lovan
Donald Trump won his 2024 presidential campaign with the promise of lower taxes and a stronger U.S. economy, made possible by mass deportations of undocumented immigrants and increased tariffs on imports.
His pledge to put “America First” on these top issues led him to victory, but the economic consequences of such policies may not be what consumers expect.
Mass deportations could reduce employment and lower U.S. GDP through 2040, according to a recent working paper from the Peterson Institute of International Economics.
Multiple studies from the Peterson Institute of International Economics and the Tax Foundation found that the proposed universal tariff of 10% and further tariffs on Chinese and Mexican products would also increase how much Americans have to spend.
The American Immigration Council reported that undocumented immigrants paid $35.1 billion in taxes nationally and $755 million in Arizona alone. Immigrants also make up 13.1% of the population in Arizona.
Effects of Mass Deportation on the American Economy
As of 2022, there were an estimated 11 million unauthorized immigrants in the U.S.; 8.3 million U.S. workers were unauthorized immigrants according to the Pew Research Center, representing 4.8% of the U.S. workforce.
Undocumented workers staff a variety of industries across the nation, but construction, agriculture, and hospitality would suffer the most from the mass deportation of their laborers.
According to the American Immigration Council, more than a quarter of U.S. agriculture industry workers, one in four U.S. construction industry workers, 23.1% of STEM workers, and 27.7% of all health aides are immigrants. These industries are also heavily reliant on imported goods.
Robert Lynch, a professor of economics at Washington College, said that immigrants are not “substitutes” for American workers and that American workers are unlikely to be able to fill the gaps created by mass deportation in a press call hosted by America’s Voice.
“They have different skills, different ability to work, different willingness to work, and in fact, often they are not in competition with American workers, but they work cooperatively with American workers, increasing each other's productivity and their wages, creating more jobs, and growing the economy forever,” said Lynch.
The Peterson Institute of International Economics projected mass deportation would cause employment to fall 1.1 to 6.7 percent below the baseline. Despite common misconceptions and a major talking point of Donald Trump, deporting undocumented immigrants does not ensure more jobs for native-born Americans.
“Their deportation will instead prompt US business owners to cut back or start fewer new businesses, in some cases shifting their investments to less labor-intensive technologies and industries, while scaling back production to reflect the loss of consumers for their goods,” wrote PIIE senior fellow Michael Clemens.
The growth of the U.S. labor force needed to sustain economic growth would have been non-existent over the past few years and will not be possible in the future without immigration as the U.S.-born population continues to age and decline according to a policy brief released by the National Foundation For American Policy.
“The working age population today is only growing through immigration, and if we return to the low levels of immigration seen during the first Trump administration, we would not see the growing workforce we need to sustain labor demand,” said Stuart Anderson, the executive director of NFAP, in a press call with America’s Voice.
Mass deportations could aggravate existing labor shortages, driving up production and labor costs, and increasing consumer prices, said Jonas Gamso, an associate professor of international trade and global studies at Arizona State University.
Peterson Institute of International Economics projections showed that at best, the U.S. GDP would be unchanged during Trump’s four-year term, and at worst, it would be 7.4% lower than the baseline. This deficit would take decades to recover from, only rising to 5.8% below the baseline by 2040.
“It's very difficult to forecast how long it would take to recover from those things,” Lynch said. “It's not so much that you would have a recovery, you would probably have an economy that would move to a longer term lower level of growth and of overall size.”
A man walks through the Morley Gate Border Station into the U.S. on Oct. 29, 2024
An altar paying tribute to Maria Leal in the Pimeria Alta Historical Society Museum in Nogales, Arizona, on Oct. 29, 2024. Leal died at the museum in May 2016.
Guillermo Valencia poses with a box of watermelons, one of the products currently stored in the warehouse. Oct. 29, 2024, Nogales, Arizona.
The entrance to Mexico at the Nogales-Morley Gate Border Station in Nogales, Arizona on Oct. 29, 2024.
How Foreign Tariffs Will Impact Everyday Americans
2019 marked the first year U.S. agricultural trade experienced a deficit since the 1960s, according to the U.S. Department of Agriculture. In the last six years, the market has been in a deficit for four, with a record deficit of $31.8 billion in 2024.
Betty Resnick, an economist for The American Farm Bureau Federation, wrote that the deficit can be attributed to several factors, including lower domestic crop production and less competitive access to traditional export markets as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership has lowered tariffs for other exporters.
If other countries respond with retaliatory tariffs on American goods, as they did during Trump’s first administration, there could be strain on the U.S.-Mexico-Canada Agreement and U.S. exports could decrease further, ASU professor of international trade Gamso said.
“We’re a bit nervous when tariffs are slapped on agriculture products,” said Julie Murphree, the strategic communications director at the Arizona Farm Bureau.
“Up until the most recent past, we’ve been a net exporter. The whole international market has been very important for American farmers,” she said.
Mexico rose to be the United States' biggest trade partner in 2023 with $807 billion in goods and services exchanged; Canada and China fell closely behind.
Trump’s tariff proposals outline a 10% to 20% tariff on all imported goods, a 60% tariff on goods from China, and a starting 25% tariff on goods from Mexico and Canada as a threat to lessen the amount undocumented immigrants crossing the border. He has also stated that he will continue to raise the tariffs on Mexico as necessary.
Trump touts that these new tariffs will generate more revenue for the U.S. government while hurting foreign economies and incentivizing American-owned companies to return to manufacturing in the states.
Gamso believes that while the tariffs will bring in more revenue, it won’t be enough to offset the overall costs to consumers and producers. Companies would also have to decide whether to continue operating abroad and pay the tariffs, or move to the U.S. and pay higher production costs.
Importing companies pay the tariff to the government, in this case, to the United States, and in turn, will most likely raise prices for consumers to make up for the upfront costs, he said.
Domestic producers would take the opportunity to raise their prices for increased revenue in a more expensive market for consumers.
“There are winners and losers of trade,” Gamso said, “consumers would be the losers.”
Trump began imposing tariffs during his first term mainly on steel, aluminum, solar panels and Chinese products. President Biden has kept many of these tariffs in place during his term.
The Tax Foundation published a study this summer detailing that these tariffs reduced GDP in the United States by 0.2% and generated more than $233 billion in taxes from U.S. consumers to the U.S. government.
The study also estimated the proposed tariffs would reduce hours worked by 142,000 full-time equivalent jobs.
The increase in consumer spending due to the proposed tariffs would cost the average middle-income U.S. household more than $2,600 a year, according to the Peterson Institute of International Economics.
