Counting the costs of Trump’s immigration crackdown

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0:18Good morning from the Financial Times. It's Monday, April 6th, and today we're changing things up just a little bit. We're going deep into America's immigration debate to explore how months of raids, arrests and fear are weighing on the U.S. economy. It has had a bit of a chilling effect on certain sectors, definitely. Agriculture, construction, hospitality. And of course, that will filter down into the numbers. I'm Victoria Craig and this is your FT News Briefing.

0:58Hours after taking the oath of office on January 20th last year, U.S. President Donald Trump sat behind the Resolute desk in the White House. It was covered with dozens of executive orders that he signed over the course of an hour as the press looked on. One of the first he was handed by Will Scharf, an assistant to the president, was called Protecting the American People Against Invasion. This is a proclamation guaranteeing the state's protection against invasion. based on the current crisis of the southern border, and invokes various executive powers relating to... In the nearly year and a half since the president inked his signature on that proclamation, the U.S.

1:35has been rocked by controversy. Some Americans have been outraged by the tactics officers from Immigration and Customs Enforcement, or ICE, have used to carry out that executive order. Thank you very much. We have a very disturbing video out of Queens. Federal agents are seen entering a family's home with guns drawn. That early morning arrest playing out on a quiet residential block in full view of neighbors. The partner of the man who was arrested maintains he has no criminal record and has lived and worked in Elgin for more than a decade. Now, Ring surveillance video shows more than a dozen armed federal agents descending on a Burnsville home on Saturday.

2:12A woman who lives there tells Fox 9 multiple Latino people who rent rooms there were arrested by ICE after being followed home from the store. Tensions peaked early this year in Minneapolis after agents killed Renee Good and Alex Preddy. Ultimately, the outrage was part of what prompted President Trump to fire his Homeland Security Secretary and scale back the crackdown. But the social and economic impact of the immigration overhaul will be long-lasting, as Guy Chazan has reported. He covers U.S. politics and policy for the FT, and he recently spent some time reporting in the Rio Grande Valley of South Texas.

2:48He joins me now to talk about what he found there. Welcome back to The Briefing, Guy. Hi, nice to be here. So just tell me, why did you go to Southern Texas in the first place? What's happening there? Well, I just discovered that there were builders who were very disgruntled about the situation in their part of Texas, which is that basically ICE, Immigration and Customs Enforcement officers, were going into construction sites and just nabbing people and basically detaining them and then often deporting them. And this was wreaking havoc on the construction sector because it's very, very heavily dependent on undocumented migrants in that part of the world.

3:30You spent some time with a builder in South Texas who said he should be benefiting because it's boom times for the construction industry in this part of the country, but he's not. What did he tell you? Yes. So I spoke to this one builder called Ronnie Cavasos, And he basically said that the ice raids on his construction sites have been so disruptive that he has had to delay projects. He's had to extend construction loans with his banks. Normally, these jobs take about four to five months to get built. And the standard for a bank loan is 12 months. So a house that would have normally taken five months, we're now signing extensions for past 12 months.

4:14To say that there's going to be any profit margin left is silly. We basically build those houses for free. And this is a huge problem, not just for Ronnie, but for the entire construction industry, because this part of South Texas is home to a lot of companies coming in and wanting new headquarters or buildings to be built, right? Yeah, it's a real boom area. You have big companies like SpaceX, for example, which are massively expanding their presence there. There's a big LNG plant, which is being built very near Ronnie Cavazos and all the other builders I spoke to. IKEA, for example, has just built a massive new shop there.

4:53Texas has become a very attractive business environment, partly because of the sort of light touch regulation. I think in a way, this has become a kind of political problem for a state like Texas, that it would like to attract those businesses. But in order for those businesses to move there, the construction sector needs to work unimpeded. And ICE is creating a problem for the sector, which is halting or slowing down those construction projects. Now, the White House says that this crackdown is to improve job prospects for young Americans who are unemployed and without higher education. But is there a sense from the conversations you've had about whether those are the people that are now taking those jobs that people like Ronnie Cavazos are offering?

5:38Well, I must say the builders I spoke to were quite dismissive of domestic American workers, maybe unfairly. but they're very, very firmly of the opinion that if the undocumented migrants are deported, that they will not be able to find replacements for them among domestic workers. I don't know to what extent that's true. The White House is definitely of the opinion that there is huge untapped potential among people who would like to work but basically can't because they're having to compete with migrants from Central and Southern America. But I think if you speak to people in the sector, they just don't buy that.

6:21For example, Ronnie told me after the financial crisis in 2008, he traveled a lot doing projects all over the US. And he said everywhere he worked, the sector was reliant on migrant labor, often undocumented migrant labor. It's Latinos and mostly from Mexico. And I've seen it firsthand. That's who's willing to do the skilled labor trades, the tile setting, the concrete pouring, the roofing. Those jobs are filled by immigrant labor. If the United States thinks that it's going to happen without them, well, who's going to train the next labor force? Tell me where any kid that doesn't want to go to college, where they can go to learn how to frame a house.

7:07That doesn't exist anywhere. And what I find so interesting about this whole conversation is that in your discussion with Ronnie, you also talked about the education opportunities. It is those migrant workers who are trained in a way that Americans are not. Yeah, I think that's true. Ronnie said that essentially migrants train each other. The reality of the construction industry here in the United States is a maestro is somebody that's got the knowledge of how to do that skill that's been doing it for 5, 10, 15, 20 years. They've been trained and fortified on the job site. They're the ones who train the next generation.

7:46Now, as I say, I don't know how true that is, but that was definitely what I was hearing from several people in the construction sector down in southern Texas. The other interesting part about this conversation is each industry is also not treated the same when it comes to migrant labor. There are ways for farmers, for example, to bring in temporary workers from abroad. Why is that not applied more broadly? I didn't really investigate that, but I think that the construction industry would definitely benefit from the kind of scheme that now exists for agricultural workers, the H-2A visa system.

8:25Essentially, that allows farms to bring in temporary workers to, for example, help with the harvest. Although one thing I found in Texas, which is interesting, is that ICE was even detaining people who have H-2A visas, which was creating all kinds of problems for farmers. I spoke to Dante Gagliacci, president of the Texas International Produce Association. And he said this has been a real problem in the sector. The grocery store doesn't care what's happening with enforcement. They're just going to move on to the next guy that has that order. And, you know, that puts our farmer in a bad economic position now.

9:01He has workers he has to pay for that aren't harvesting. He now has lost orders. And so, yeah, there was a lot of challenges there. There is, of course, a political angle to all of this as well. Immigration was a huge issue for President Trump when he campaigned in 2024. But I'm curious how it's now playing with voters ahead of the November midterm elections in the U.S., particularly when it comes to the economic impact of this policy on top of already difficult economic circumstances for Americans across the country? Well, I think the polling data is not very extensive, but I think one gets the impression when voters are asked about this, that they have real misgivings about the way that this immigration crackdown has been carried out and they don't like it.

9:49They don't like the way ICE has gone into big cities like Minneapolis and carried out raids, deported children, and often detained people in a very aggressive way. You see polling data suggesting that even Republican voters think that maybe the crackdown has gone too far. It was interesting that the The builders that I spoke to in South Texas had voted for Trump in 2024, but were now regretting their vote. One of those who has sort of changed his mind about Trump was Mario Guerrero, who's head of the South Texas Builders Association. Let's just use these kids as an example. Nationally recognized trumpet player, nationally recognized singer.

10:36two brothers detained by ICE because his dad went to go speak to ICE in regard of his court date. And after that, they all get detained. So when you have things like that that are happening because of the current administration, how are you ever going to win the people back? It's a tough situation for some people, that's for sure. You know, the politics certainly are one part of this guy. But if we get down into the nitty gritty numbers here, is there a sense of what the overall economic impact could be from this migrant crackdown on the U.S. economy? I think it's going to be very difficult to really ascertain that in hard and fast numbers.

11:13But according to some of the economists you speak to, it has had a bit of a chilling effect on certain sectors, definitely. Agriculture, construction, hospitality. And of course, that will filter down into the numbers. And those industries alone together make up as much as 9 % of US GDP. Exactly. For example, there's been a recent study by the Brookings Institution, which basically said that in industries that depend on immigrant labor, the reduction in the influx of new immigrants could slow economic growth, push up wages, stoke inflationary pressures across the economy. And it also said that consumer spending by immigrants will fall by $10 to$40 billion this year.

11:57And that really shows how, in a way, the crackdown has sort of broader ramifications because immigrants are often scared to actually leave the house and do shopping, grocery shopping, or go out to restaurants. And that has led to a downturn in economic activity in certain communities, which in the aggregate could actually have an impact on the overall numbers. Certainly something I know President Trump will be watching very closely ahead of the midterm elections. Guy Chazan covers U.S. politics and policy for the FT. Thanks so much, Guy. Thank you. You can read more on Guy Chazan's reporting from South Texas for free using the link in our show notes.

12:41This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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