Fact check: How did Trump's deportation policies affect the US economy?

1. Why economists warn of a jobs bloodbath — and where losses concentrate

Analysts modeling the effect of deporting millions of people conclude the labor force would contract sharply, producing both direct job losses among deported immigrants and indirect losses for U.S.-born workers who depend on immigrant-driven demand and complementary labor ^{[4] [1]}. The Economic Policy Institute’s July 2025 analysis calculates nearly 6 million job losses spread across construction, child care, agriculture, and service sectors where immigrant labor is disproportionately employed; states with large immigrant populations—California, Texas, Florida, and New York—face the biggest absolute losses ^{[1] [4]}. These studies emphasize that job losses cascade through supply chains and consumer spending, amplifying the initial workforce reduction into broader labor-market contraction ^[1].

2. Macroeconomic toll: GDP, deficits, and long-term growth risks

Macro models from Penn Wharton and budget-score projections from the Congressional Budget Office in September 2025 present a unified picture: mass deportations reduce GDP, slow population growth, and worsen federal budget balances ^{[2] [3]}. The Penn Wharton analysis finds wage and output declines for higher-skilled workers and a net shrinkage of economic output, while the CBO quantifies slower population growth—about 320,000 fewer immigrants—leading to lower labor supply and taxable receipts ^{[2] [3]}. These effects raise concerns about sustaining economic growth and public finances over the medium term as fewer workers mean lower consumption and tax revenue, pressuring deficits already stressed by demographic shifts ^[3].

3. Competing mechanisms: why some wages might temporarily rise

Models acknowledge a counterintuitive, short-term outcome: authorized lower-skilled workers could see temporary wage gains as deportations reduce labor supply in certain low-wage occupations, boosting hourly pay for remaining workers ^[2]. However, analysts caution this gain is uneven and transient, while higher-skilled workers can suffer due to reduced demand for their services across sectors and overall economic contraction ^[2]. The net effect in most models is negative because wage gains in narrow occupations are outweighed by lost employment, reduced hours, and diminished firm revenues that lead to layoffs and lower investment ^{[2] [1]}.

4. Regional winners and losers: states that would feel it most

The demographic footprint of deportations means states with larger immigrant populations bear disproportionate costs, according to the EPI and related studies: California, Florida, New York, and Texas are repeatedly identified as hotspots for job and output losses ^{[4] [1]}. Local economies reliant on immigrant labor in construction, hospitality, and child care would face acute labor shortages, higher input costs, and reduced consumer demand, which in turn lower state tax revenues and strain public services. Policymakers in those states would confront immediate fiscal and operational challenges tied to both the direct removal of workers and the secondary economic contraction ^{[4] [3]}.

5. The trillion-dollar claim — unpacking the magnitude

Commentators and think tanks, including analysts at the Cato Institute, argue the cumulative macroeconomic cost of mass deportations could reach trillions of dollars over time, reflecting lost GDP, lower productivity, and higher government costs from reduced tax receipts and transitional spending ^[5]. These figures stem from linking employment shocks to long-run output losses and fiscal shortfalls. While methodologies differ—some emphasize consumption multiplier effects, others stress demographic-driven productivity declines—the consistent finding across models is that large-scale deportations impose persistent, measurable economic costs rather than one-off adjustments ^{[5] [2]}.

6. Consensus, caveats, and methodological differences worth noting

Multiple sources agree on directionality—negative net impact on employment and GDP—but diverge on scale and timing due to modeling choices: the assumed number of deportations, labor-market elasticity, and spillover multipliers drive outcomes ^{[1] [2] [3]}. The EPI emphasizes sectoral job counts and immediate job loss estimates, Penn Wharton models distributional wage effects and fiscal implications, while the CBO centers on population and budget projections; each uses different baselines and horizons, so headline numbers (e.g., 6 million jobs vs. trillions lost) should be read as complementary scenarios illustrating risk ranges rather than precise forecasts ^{[1] [2] [3]}.

7. What these projections omit and why it matters

Models commonly omit political, enforcement-capacity, and behavioral responses that could alter outcomes: business relocation, employer substitution, undocumented re-entry, and state-level policy offsets are difficult to predict and therefore often excluded, creating uncertainty around precise impacts ^{[5] [3]}. Studies typically assume enforcement succeeds at scale and that removed labor is not replaced, which yields larger negative estimates; if firms mechanize or source labor domestically, some gaps shrink, but substitution carries costs and time lags that still imply short- to medium-term economic pain. Understanding these omitted dynamics matters for interpreting the quantitative claims and for designing mitigation policies ^{[5] [3]}.