A working paper published this month from the American Enterprise Institute (AEI), a conservative economics policy center, found the Trump administration’s immigration policy will likely result in a negative net migration in 2025—something the U.S. has not experienced in decades—that would shrink labor participation and “put significant downward pressure on growth in the labor force and employment.” 

Net migration in 2025 will likely be between 525,000 individuals leaving the U.S. and 115,000 migrants entering the country, but will likely be negative, according to the report. With fewer immigrants in the country available to work, combined with a decrease in consumer spending—immigrants had $299 billion in spending power in 2023 and paid $167 billion in rent—U.S. GDP growth may shrink by between 0.3% and 0.4%. U.S. real GDP is about $23.5 trillion, which means the economic tradeoff of the deportations is roughly between $70.5 billion to $94 billion in lost economic output annually. The drag on what would usually be 2.8% annual growth would indicate a slowing in economic expansion as employers not only hire fewer people to fill fewer roles, but consumers spend less in an economically uncertain environment.

“Our workforce is disproportionately made up of immigrants relative to their share of the population, and because of that we…really can’t sustain a high level of job growth with the U.S.-born population alone, because there just aren’t enough bodies, essentially, to do that,”  report co-author Tara Watson, a Brookings Institute economist and professor of economics at Williams College, told Fortune.

The foreign-born U.S. labor force—which made up 19.2% of the total labor force as of 2024—has shrunk by 735,000 people since January, according to data from the Federal Reserve Bank of St. Louis. But the departure of foreign-born workers in the U.S. now follows an immigration surge during the Biden administration, which helped create a swell of economic growth. The Congressional Budget Office projected the increase in migrants would boost the U.S. nominal GDP by $8.9 trillion between 2024 to 2034. 

Meanwhile, the U.S.-born workforce is shrinking as many age out and retire. 

Wendy Edelberg, Watson’s co-author and a senior fellow in economic studies at the Brookings Institution, called the projected loss of immigrant workers “startling” and sees more trouble on the horizon. The U.S. has seen a surge in work permit applications in the first half of 2025, suggesting to Edelberg that many immigrants—out of concern for Trump’s immigration policy—rushed to secure employment ahead of a crackdown, contributing to a healthy labor market and a 147,000 boost to payroll enrollment in June.

But “we’re not going to ride that wave forever,” Edelberg told Fortune. She and Watson projected a shrinking labor force would result in payment enrollment growth of only 30,000 to 40,000 per month in the second half of the year. This number would be healthy and not indicative of a recession because it will simply indicate a much lower ceiling for labor force growth, Edelberg said. If weak immigration continues into 2027, Edelberg predicted that the jobs figure could turn negative.

Trump’s immigration crackdown

Immigration has been the cornerstone of the Trump administration’s policy agenda, with the president on day one of his second term vowing to crack down on undocumented migrants to the U.S. Trump’s Big Beautiful Bill injected $45 billion into the Department of Homeland Security to expand deportation facilities and gives Immigration and Customs Enforcement (ICE) more than $11 billion annually to increase its workforce of deportation officers.

The White House called AEI’s report on the negative economic impacts of mass deportations “baseless fear-mongering in defense of illegal immigration,” claiming that 10% of young adults in the U.S. are neither employed, in higher education, or seeking vocational training.

“There is no shortage of American minds and hands to grow our labor force,” White House spokesperson Abigail Jackson told Fortune in a statement. “President Trump’s mass deportation campaign means higher wages and more opportunity for American workers.”

Unlike Trump’s first term, in which he oversaw a more modest curtailing of immigration, the president has ramped up deportations after a sluggish start to his second administration, with Watson and Edelberg projecting the removal of about 300,000 immigrants in 2025 alone.

Beyond the nearly 67,000 immigrants the Trump administration has detained in fiscal 2025 and more than 71,000 deported, according to ICE data, others have self-deported or left voluntarily out of growing concern over hostile policies as part of the out-migration, according to AEI’s study. Watson warned net migration could be even lower in 2026, as the administration likely refuses to renew temporary work visas and foreign-born students snub American universities in favor of higher education opportunities elsewhere.

“The environment is going to make people like students reluctant to come study here,” Watson said. “Temporary workers may be questioning whether this is the right place for them to come to work.”

Widespread economic concerns

Businesses are seeing the early consequences of weakened immigration, with farm workers refusing to show up to work out of fear of ICE raids, Bloomberg reported. Nursing homes are similarly struggling to attract a workforce as the Trump administration revokes some immigrants’ legal status and slows the immigration process for documented migrants.

“We feel completely beat up right now,” Deke Cateau, CEO of Atlanta-based nursing home operator A.G. Rhodes, which has one-third of its staff made up of immigrants, told the Associated Press. “The pipeline is getting smaller and smaller.”

Beyond concern about a shrinking GDP, Apollo chief economist Torsten Sløk warned that if the U.S. were to deport 3,000 undocumented immigrants per day for a year, the country’s labor force would drop by 1 million people. Workplaces with high rates of immigrant employment could subsequently see an increase in wages as they struggle to attract workers.

“Lowering the labor force by 1 million will reduce the participation rate by 0.4 percentage points, which will lower the unemployment rate, lower job growth, and increase wage inflation, particularly in the sectors where unauthorized immigrants work—namely construction, agriculture, and leisure and hospitality,” Sløk said in a Saturday blog post.

“In short, deportations are a stagflationary impulse to the economy, resulting in lower 

employment growth and higher wage inflation,” he continued.

While some parts of the U.S. could experience stagflationary environments, stagflation could be tempered in areas with large immigrant populations as their spending power wanes and demand for industries like housing construction decreases, Edelberg said.

Watson posited that besides GDP, shrinking immigration will most heavily be felt in Social Security. Undocumented immigrants paid $25.7 billion in Social Security taxes in 2022, according to a 2024 analysis by the left-leaning Institute on Taxation and Economic Policy. 

“There’s a very tight correlation between how many people are coming into the country and the degree to which we can sustain Social Security at its current levels going forward,” she said.

More broadly, the economic ramifications of Trump’s mass deportation campaign are only one part of the policy’s impact, Edelberg said, the other half being the palpable changes in the feeling within American cities spurred by ICE raids and the mobilization of the National Guard to accelerate deportations.

“The broad macroeconomic events are going to be pretty modest,” she said. “In terms of how we’re affected by this immigration policy, I think they will be dwarfed by how we engage with this policy, just in the images and in our communities.”