Illegal migrants in US: Deporting even 7.5 mn could cut real GDP by 12%

One of Donald Trump’s key promises during the 2024 presidential campaign was to carry out mass deportations of immigrants living in the US without legal status. Now, in office, his administration is moving forward with increased enforcement. But what will be the economic impact of this move on the US? According to some experts, deporting even 7.5 million workers could cut Real GDP by 12%. 

 A study led by Warwick J McKibbin, an economics professor at the Australian National University, published in 2024, found that removing undocumented workers would sharply cut labour supply in sectors like mining, agriculture, services and manufacturing. Deporting even 7.5 million workers could cut Real GDP by 12%.  

 

 

In their presentation titled "Migration Restrictions and Damages to the US Economy," economists Warwick McKibbin, Megan Hogan, and Marcus Noland highlighted the economic impact of deportations at the Peterson Institute for International Economics:

 

Real GDP  

7.5 million worker deportation scenario: -12%

1.3 million worker deportation scenario: -2.1%

 

Inflation  

7.5 million worker deportation scenario: 7.4%

1.3 million worker deportation scenario: 1.3%

 

Employment (hours worked)  

7.5 million worker deportation scenario: -8.1%

1.3 million worker deportation scenario: -1.4 % 

 

Trade balance  

7.5 million worker deportation scenario: 3.9%

1.3 million worker deportation scenario: 0.7%  

 

Durable manufacturing employment  

7.5 million worker deportation scenario: -43.7%

1.3 million worker deportation scenario: -7.0% 

 The US Immigration and Customs Enforcement (ICE) has said that since January 2025, it has been detaining and preparing to deport between 600 and 1,100 immigrants daily. This is a sharp rise from the 282 immigration arrests per day recorded in September 2024 under the Biden administration.  

 

"The current trend would place the Trump administration on track to apprehend 25,000 immigrants in Trump’s first month in office. On an annual basis, this is about 300,000 – far from the 'millions and millions' of immigrants Trump promised to deport. A lack of funding, immigration officers, detention centres and other resources has reportedly impeded the administration’s deportation work," said Francisco I Pedraza, professor of political science at Arizona State University, Jason L Morín, professor of political science at California State University, Northridge, and Loren Collingwood, associate professor of political science at the University of New Mexico in a separate report published February 18, 2025.  

 

The Trump administration is seeking $175 billion from Congress for immigration enforcement over the next four years, Axios, an American news portal, reported on February 11, 2025.  

Impact on food and housing costs  

 

If mass deportations proceed, food prices are likely to rise. Many US industries depend on immigrant workers, including those in the country illegally.  

 

Immigrants without legal status make up about 5% of the US workforce overall, but their presence is far greater in some industries. According to the US Department of Agriculture, about half of all US farmworkers lack legal documentation.  

 

Some of these workers hold specialised roles, such as managing planting and harvesting schedules or operating machinery like tractors, loaders, and irrigation systems. If they are removed, food production could decline, leading to higher grocery and restaurant costs.  

 

"With fewer workers to pick fruits and vegetables and prepare food for shipment and distribution, domestic food production could drop, pushing up prices and increasing reliance on imports. National estimates suggest that between 10% and 15% of restaurant and food preparation workers are undocumented immigrants," the researchers wrote on The Conversation.

 

Construction is another sector at risk. Nearly a quarter of construction workers lack legal authorisation, many specialising in homebuilding tasks such as flooring, roofing and drywall installation. Their absence could slow down housing projects, driving up costs at a time when affordability is already a major issue.  

   

Trump and his supporters argue that deporting immigrants would save money by reducing the number of people using public services like schools and temporary shelters. "It’s not a question of price tag," Trump told NBC News in November 2024. "We have no choice. When people have killed and murdered, when drug lords have destroyed countries, they’re going to go back to those countries because they’re not staying here."  

 

However, experts challenge the economic logic of large-scale deportations.  

 

"First, immigrants are filling labour shortages and doing jobs that many Americans don’t want to do, often in difficult or low-paid conditions. Even if Americans were willing to take these roles, there simply aren’t enough available workers to replace those who would be deported," the researchers said.  

 

They added that with fewer workers, employers would have to raise wages, increasing costs for businesses and consumers. Sectors reliant on credit, such as mortgages and car loans, could also face disruption, as undocumented immigrants contribute to financial stability by consistently making payments.  

 

"Undocumented immigrants pay more than $96 billion in federal, state and local taxes each year while consuming fewer public benefits than citizens. They are not eligible for Social Security, Medicare, or many safety net programmes like food assistance," the researchers said.  

 

Past cases offer insight  

 

Past state-level immigration crackdowns provide a glimpse of what could happen nationally. In 2011, Alabama passed HB-56, a law that required police officers to check the immigration status of drivers and banned landlords from renting to undocumented immigrants. Workplace raids prompted many immigrants to leave the state.  

 

The result was an economic downturn, with Alabama losing an estimated $2.3 billion to $10.8 billion in annual GDP due to worker shortages and reduced economic output.  

 

Nevada, where over 10% of the population lives in households with at least one undocumented immigrant, could face major disruption. "In our 24-hour economy, we know that these hotels and casinos could not, should not, would not be able to open every day without immigrants," AP quoted Peter Guzman, president and CEO of the Latin Chamber of Commerce in Nevada.  

 

Indian immigrants  

 

According to the American Community Survey, published in 2021, undocumented Indian immigrants in the US, have a collective spending power of $15.5 billion and contribute $2.8 billion in tax revenue. Indian immigrants are the third-largest group of undocumented workers in the US, following those from Mexico and El Salvador.  

 

US authorities estimate that around 18,000 Indian nationals have entered the country illegally. However, the actual number remains contested:  

 

Pew Research Center and the Center for Migration Studies of New York estimate 700,000 undocumented Indians in 2022.  

The Migration Policy Institute puts the figure at 375,000.  

The Department of Homeland Security’s official data states 220,000.  

 

On February 5, the first group of 104 deported Indian nationals arrived in Punjab. A second batch of 116 landed on February 17 at Amritsar International Airport, with more deportations expected in the coming months.  

 

Undocumented immigrant households  

 

According to Pew Research, 6.3 million US households include at least one undocumented immigrant, affecting more than 22 million people. Among these:  

 

86% have a householder or spouse who is undocumented.  

70% contain lawful immigrants or US-born residents.  

1.3 million adults were born in the US to undocumented parents.  

 

Last month, Bishop Mariann Edgar Budde of the National Cathedral in Washington called on Trump to reconsider mass deportations. "The people...they are people who pick our crops, clean our office buildings, who labour in poultry and meat-packing plants, who wash our dishes after we eat in restaurants, and work the night shifts in hospitals," she said.