How Immigration Raids and Restrictive Policies Are Quietly Dragging Down the U.S. Economy

The Trump administration’s immigration raids have a victim most saw coming: the U.S. economy. Immigration and Customs Enforcement (ICE) raids across the country are directly hurting the economy, and we are starting to see the negative consequences in numbers. Fear of being detained by undocumented people and United States citizens of Latine heritage is feeding into the growing fear of economic uncertainty in the country. Here are a few facts about the U.S. economy and how President Donald Trump’s immigration policies are causing harm.

Farmers are facing the consequences of the immigration policies most directly

According to data from the University of Arkansas, there were almost double the number of bankruptcies in the first quarter of 2025 as there were in 2024. Farmers are facing a direct impact from the immigration policies, as the workforce fears immigration raids. The fears sometimes turn into farmworkers, who are largely immigrants, refusing to show up for work.

A report from KFF found that 7 out of 10 farmworkers are Latino, with two-thirds of them being undocumented. NewsNation reports that farmworkers are struggling to retain workers because of the immigration raids that are being conducted. Though President Trump at one time temporarily paused his immigration directive, it was quietly reversed once more, leaving many farmers facing uncertainty.

Citizens are losing jobs from the immigration raids

Sen. Alex Padilla (D-CA) shared the statistic recently on X (formerly Twitter) about what is happening to the California economy. California, for context, has the fourth-largest economy in the world, recently surpassing Japan. The LA Times reported that California has experienced a sudden decline in employment in the state due to the immigration raids. It is more than just the people being detained.

According to the LA Times, the ripple effect of scaring communities from leaving their homes is impacting businesses. With fewer people going out to spend money, there is less revenue to keep people employed. CalMatters reports that U.S. citizens lost 271,541 jobs due to the immigration raids, and non-citizens lost 193,428 jobs, according to a study from the University of California, Merced.

“What we know from previous research is that the work that undocumented immigrants or non-citizens do does not exist in a vacuum,” Edward Flores, the lead author of the report, told CalMatters. “If there’s disruptions to the work that undocumented immigrants do, it has ripple effects. A slowdown in one industry could cause slowdowns in other industries.”

Leading federal economic officials confirmed that the immigration policies are hurting the economy

Forbes reported on Federal Reserve Chair Jerome Powell admitting that the mass deportations are harming the U.S. economy’s growth. During a House Committee on Financial Services hearing, Rep. Maria Salazar (R-FL-27) asked Powell directly if the deportations are harming the U.S. economy. Powell originally avoided answering the question directly and said the department he leads isn’t responsible for immigration.

There are two things that affect growth,” Powell told Rep. Salazar. “One is growth in the labor force, more people working, and the other thing is productivity, how much do they produce per hour of work. And when you significantly slow the growth of the labor force, you will slow the growth of the economy.”

He also reiterated that the Federal Reserve is not tasked with or supposed to have a view on immigration policies. Rep. Salazar then followed up and framed the question through an economic lens.

“You do agree that if we don’t have those hands, then we don’t grow,” Rep. Salazar asked Powell.

“I think that growth will slow and actually is slowing this year, and that’s one of the reasons,” Powell responded.

This isn’t the first time that Powell has pointed to dropping immigrant numbers as a reason for economic woes for the country. In November 2022, Powell showed how both a drop in net immigration to the U.S. and the COVID-19 pandemic led to an economic slowdown. He argued that the two events happening together were responsible for up to 1.5 million jobs being vacant.

The latest jobs numbers show the downside to the Trump administration’s immigration policies

The latest jobs report spelled a particularly abysmal jobs growth session. According to the numbers from the nonpartisan Bureau of Labor Statistics, the U.S. created 73,000 jobs in July. This was a significant miss from the projected job gains of 100,000. In addition to the July numbers, the Bureau of Labor Statistics also had to adjust the numbers for jobs in May and June with 258,000 fewer jobs than originally reported.

“This is a gamechanger jobs report,” Heather Long, a chief economist at Navy Federal Credit Union, told NBC News. “The labor market is deteriorating quickly.”

According to the Bureau of Labor Statistics, job numbers in May were adjusted to only 19,000 from the original 144,000. This reflects a downgrade of 125,000 jobs in May. For June, the Bureau of Labor Statistics downgraded the number of jobs from 147,000 to just 14,000, reflecting a 133,000 drop in new jobs.