The Trump Effect and Immigration Policy the impact on the US labor market

Currently, the immigration policy in the United States is becoming a core issue in economic debates, especially in the development of the labor market under the influence of the "Trump Effect". According to the White House, the tough immigration policies implemented by the Trump administration may put monthly job growth at risk, especially as the decrease in the number of foreign born workers has become a trend. From the current situation of the US labor market, this policy has sparked widespread discussion and concern.

Firstly, understanding the role of immigration in the US labor market is crucial. According to data from the US Bureau of Labor Statistics, foreign born labor holds a significant position in the US labor market. Despite a decrease in immigration numbers under the Trump administration, immigrant workers remain an indispensable part of supporting many industries such as construction, catering, agriculture, and technology. At the same time, immigration also provides the United States with a young and low-cost workforce, which is crucial for addressing the challenges of an aging population domestically.

Secondly, in the early days of the Trump administration, immigration policies showed an increasingly strict trend. Trump vigorously promotes strengthening border controls, enhancing deportation mechanisms, and implementing strict measures against illegal immigrants. This series of policies has had a profound impact on the labor market, especially in low - and middle-income industries, where the reduction of immigrant workers has led to employment difficulties. Taking construction and agriculture as examples, these industries heavily rely on foreign labor. If the influx of these labor forces is blocked, it will not only lead to a shortage of labor supply, but may also exacerbate the rise in production costs.

Furthermore, Federal Reserve Chairman Powell recently pointed out in an interview that the decrease in immigration may lead to a slowdown in US economic growth. Migrant workers play an important role in alleviating the aging population, improving productivity, and promoting consumption and investment in the country. Especially during the Biden administration, the number of immigrants in the United States once increased, driving the expansion of the labor market. However, the Trump administration's immigration crackdown measures, especially the high-pressure policies targeting illegal immigrants, may abruptly halt this expansion trend.

From an economic perspective, the decrease in immigration not only affects the supply of the labor market, but may also increase the operating costs of businesses by lowering labor force participation rates, pushing up wage costs. Industries facing labor shortages may have to raise wage levels to attract more local workers. However, high wages may not necessarily motivate enough people to join these industries, and may instead exacerbate inflation. Deutsche Bank's research shows that a decrease in immigration may lower the breakeven rate, which means that in order to control unemployment, businesses need to create more job opportunities, but this may exceed the carrying capacity of economic growth.

Overall, the Trump administration's immigration policies are gradually having an impact on the US labor market. Although supplementing with local labor may temporarily slow down the pace of economic growth in the short term, in the long run, the role of immigration in alleviating domestic labor shortages and promoting economic growth cannot be ignored. The decrease in the number of immigrants may lead to a tight labor market, push up business costs, and thus affect long-term economic growth. Economists generally believe that relying solely on increasing local labor to fill the gap caused by the decrease in immigration may not effectively solve the problem, but may instead pose greater structural challenges to the labor market.

Finally, future policy design should focus more on balancing immigration policies with labor market demands, while providing more skills training and employment incentives for local labor to address issues of aging population and labor shortages. On this basis, whether the US economy can continue to grow will depend on how to find a reasonable balance between immigration policies and the labor market.