The U.S. may see a significant decline in its foreign-born workforce this year, with up to half a million people potentially leaving the country, as President Donald Trump intensifies his immigration enforcement policies. Economists and policy experts are warning the mass outflow could shrink the labor force and drag down economic growth.
A new analysis from the conservative-leaning American Enterprise Institute (AEI) projects net migration to the U.S. could range between negative 525,000 and 115,000 in 2025. That would mark a sharp reversal from nearly 1.3 million in 2024, and could result in the first year of negative net migration in decades. By contrast, net migration during the pandemic-crippled year of 2020 was about 330,000.
The drop reflects both a steep reduction in new arrivals and a rise in departures, driven by Trump’s aggressive deportation efforts and stricter immigration rules.
Economic Warning Signs
Foreign-born workers make up about 19.2% of the American labor force, according to the U.S. Department of Labor. Many economists warn that losing hundreds of thousands of immigrant workers could weaken key industries and reduce overall consumer spending, with ripple effects across the economy.
AEI researchers estimate that a significant drop in immigration could shave up to 0.4% off GDP this year. A separate study from the Federal Reserve Bank of Dallas suggests the impact could be even greater—potentially reducing economic growth by 0.75% to 1.0%.
“The decline in migrant inflows—and in the foreign-born population overall—will hurt growth in the U.S. labor force,” said Madeline Zavodny, co-author of the Dallas Fed report. “That slowdown will reach into nearly every sector.”
With the U.S. already grappling with an aging population and a declining birth rate, the loss of younger immigrant workers may be especially damaging in the long run.
“We rely on immigrants to help sustain growth in key sectors, from agriculture to health care to construction,” Zavodny added.
Trump Administration: It’s About American Jobs
Despite economic concerns, the White House is defending the president’s actions. In a statement to Newsweek, White House spokeswoman Abigail Jackson said the administration remains focused on removing “criminal illegal aliens” and prioritizing American workers.
“President Trump is ushering in America’s golden age and growing our economy with American workers,” she said. “American resources, funded by American taxpayers, will no longer be stretched thin and abused by illegals.”
Trump has recently signed a GOP-backed reconciliation bill that allocates roughly $150 billion toward enforcing his immigration agenda.
Industries Brace for Labor Shortages
Giovanni Peri, a labor economist at the University of California, Davis, warned that a sustained decline in immigration will hit labor-intensive sectors first—especially those that depend heavily on lower-skilled workers.
“Construction, agriculture, hospitality, personal services—all of these are vulnerable,” Peri said. “These are jobs where native-born Americans are unlikely to fill the gap.”
As a result, wages in those industries may rise as large firms compete for a shrinking pool of workers. But smaller businesses, Peri noted, will be especially exposed.
“Smaller companies often operate with tighter margins,” he said. “They won’t be able to keep up with wage hikes and may struggle to stay open.”
AEI economist Stan Veuger, co-author of the migration study, echoed that warning. He said the sectors most likely to be affected on the supply side are agriculture, leisure, and construction. On the demand side, retail, real estate, and utilities could see reduced activity as foreign-born consumers leave.
“Lower spending means lower business revenue,” Veuger said. “That leads to layoffs, and the cycle continues.”
A Shrinking Consumer Base
The economic impact extends beyond the labor force. Immigrants contribute significantly to U.S. consumer spending, housing, and tax revenue. The American Immigration Council estimates that the foreign-born population holds about $1.7 trillion in spending power, including $299 billion from undocumented immigrants.
In 2023 alone, they paid $167 billion in rent.
As the AEI report notes, a sudden reduction in this consumer base could strain businesses and local economies, especially in states with large immigrant populations.
“Small businesses in particular rely on these consumers,” said Zavodny. “If they disappear, it will be felt at every level of the economy.”
Policy Outlook: Unlikely to Shift
Despite the warnings, Trump’s administration shows no signs of changing course. Deportations are accelerating, and legal immigration pathways remain tightly restricted.
Asked whether the economic risks could prompt a reevaluation of the strategy, AEI’s Veuger was skeptical.
“I would hope so, though I am not optimistic,” he said. “The people shaping immigration policy in the White House appear indifferent to the economic or humanitarian consequences.”
As immigration levels continue to fall, and labor shortages grow, the U.S. may soon have to reckon with the long-term costs of its short-term political choices.Tools
