The High Costs of Closing America’s Doors
Since January 2025, the United States has embraced a protectionist approach to its economic, social, and migration policies. Tariffs and diplomatic rifts have isolated the country from key trading partners, burning longstanding geopolitical bridges. A crackdown on both legal and illegal immigration—including Immigration and Customs Enforcement’s (ICE) large-scale deportation raids and a recent fatal shooting of a woman in Minneapolis by an ICE agent—has wreaked havoc on communities and separated families. High-skilled migrants have not been spared, as President Donald Trump recently announced a $100,000 USD fee for the H-1B visa, a vital instrument for bringing in foreign talent. Despite being framed as “putting Americans first,” economists warn that the expulsion of talented and seasonal labour will slow growth, aggravate inflation in key sectors, and accelerate a demographic collapse.
Net immigration has driven the United States’ most recent population growth, supplying a working-age population capable of supporting a rapidly aging society. This role has become increasingly important as the US fertility rate fell to a historic low of fewer than 1.6 children per woman in 2024. Yet the administration’s hostile migration policies are now undermining this primary source of demographic stability. In July 2025, the American Enterprise Institute projected that net migration could range from 115,000 to as low as negative 525,000—a dramatic reversal from the roughly 400,000 net increase recorded in 2021, even amid COVID-19 travel restrictions. This shift marks a sharp break from the post-pandemic period, when higher immigration helped fill labour shortages in depleted industries, stabilizing growth and easing inflationary pressures. Recent data from the Pew Research Center underscores the scale of the reversal. For the first time in decades, more immigrants are leaving the United States than arriving, with the foreign-born population declining by approximately 1.4 million over the past six months. As enforcement intensifies, these outflows are likely to continue, raising serious questions about whether the US economy can withstand a sustained labour exodus.
Claims that immigrants displace workers and weaken the economy have been weaponized in politics, despite much of the evidence pointing to the contrary. The Congressional Budget Office released a report in 2024 that estimated immigration could add $8.9 trillion USD to the US GDP over the next decade, implying that tighter policies carry real economic costs. These losses are likely to be unevenly distributed; short-term effects will influence consumer prices and impact labour-intensive sectors, while longer-run costs will manifest in weaker innovation and exclusion from global trade.
The deportation of “low-skilled workers,” including those working in construction, agriculture, and hospitality, is justified as advancing the interests of “real Americans” despite the inflationary outcome. Plummeting labour availability will raise firms’ costs and, ultimately, prices for everyone. While immigrants without permanent status comprise four to five per cent of the national workforce, they account for 15 to 20 per cent of crop production, food processing, and construction, where the existing labour supply is insufficient. Construction will be particularly affected, as a quarter of builders in the United States are migrants, and agricultural organizations report that many of their employees are staying home amid mass persecution. Even if slower population growth reduces the pressure on housing prices, mass deportation increases the marginal cost of new supply, aggravating affordability when homeownership is already unattainable for many. Notably, a surge in deportations from 2008 to 2014 was linked to a 20 per cent increase in new-home prices, leading economists to worry that large-scale removals will repeat these patterns.
A significant portion of American innovation can be credited to foreign minds and ambitions. Studies show that immigrants are about 80 per cent more likely to found businesses. Although high-skilled migrants comprise only about five per cent of the workforce, they earn roughly 10 per cent of total labour income. The 50-fold increase in the H1-B visa fee, a central entry pathway for high-skill migrants, will substantially shrink the talent pipeline. Simultaneously, federal funding cuts and ideological attacks on American universities diminish their appeal, pushing prospective students and researchers toward European and Asian institutions. This highlights a misguided policy framework as measures meant to strengthen the United States risk ceding advantages to other nations. Ironically, four of the “Magnificent Seven” technology corporation CEOs are foreign-born, and three entered through pathways now being targeted. By closing the door to this talent, the United States removes a critical pillar of its own success. As a result, universities lose bright researchers, health institutions experience worker shortages, and overall innovation decreases. This culminates in a policy-induced brain drain at a time when knowledge capital is especially valuable.
Beyond labour supply, immigrants produce substantial fiscal returns and demand-related momentum in the US economy. The average migrant with a graduate degree generates a net lifetime public revenue of $1.8 million USD. On a larger scale, the nation’s foreign-born demographic wields $1.7 trillion USD in purchasing power (including $299 billion USD from undocumented immigrants). As inflows slow, large corporations may be able to replace vacancies with domestic employees, but small businesses will suffer from both staff and customer losses.
The depiction of immigrant populations as welfare freeloaders is inconsistent with reality. Given the United States’ skewed age demographic, inflows expand the working-age population and tax base at a time when public spending outpaces tax revenues. The immigration surge from the Biden administration is expected to reduce these federal deficits by about $90 billion USD per year over the next decade by raising labour supply, productivity, and tax revenue. The economy needs this stimulus and cannot afford the mass exodus the Trump administration is perpetrating.
Moving abroad, Trump’s reign has severed key trade agreements internationally, alienating long-time allies through the imposition of unprecedented tariffs. The administration overestimates its importance to the international market, as the US accounts for only 15 per cent of global final demand for goods imports. Nations will adjust and eventually consolidate their economies without this once major player. Canadian Prime Minister Mark Carney has already discussed closer trade alignment with Asia and the European Union. Trump’s unpredictable behaviour has discouraged those seeking international relationships, causing nations to look elsewhere for more stable opportunities.
Currently, the American stock market has buffered a sizable portion of the near-term costs of protectionism. The wealth effect — the tendency for people to consume more when the perceived value of their assets increases — has kept the economy afloat and provided misleading statistics about American prosperity. These benefits are disproportionately concentrated among the upper class: the richest one per cent own 50 per cent of stock market assets, and the top 10 per cent own 90 per cent. The resilience of consumer spending amid the nation’s turbulent political and economic landscape has prevented a recession, but these conditions will not persist indefinitely. Growth rooted in wealth effects, rather than widespread income growth, is fragile and leaves the economy vulnerable to a market crash. Coupled with radical protectionism, a market reversal would hit the United States particularly hard, as the administration continues to deport the working-age base that provides crucial contributions to productivity and fiscal capacity.
Lessons from the Great Depression have taught us that the collective effects of asset bubbles, isolationist trade policy, and labour scarcity can transform an economic downturn into a nationwide crisis. The United States’ current policy stance will not lead to the nation’s desired growth, nor will it protect the people; instead, it is putting them in harm’s way. In the name of putting “America first,” the administration is eroding the very pillars of the nation’s success.
Edited by Chloe Nairne
Featured image: Photo by Ian Hutchinson is licensed under the Unsplash License.
