Magic tricks undone: Trump's economic fantasy is unravelling

The essence of President Trump’s pitch to the American people last year was simple: They could have it both ways.

They could have a powerful, revitalised economy and “mass deportations now.” They could build new factories and take manufacturing jobs back from foreign competitors, as well as expel every person who, in their view, didn’t belong in the US. They could live in a “golden age” of plenty — and seal it away from others outside the country with a closed, hardened border.

Trump told Americans that there were no trade-offs. As the saying goes, they could have their cake and eat it, too. Even better, eating the cake would, on its own, produce more cake — no need for new ingredients or the skill, time, and labour necessary to make something new.

In reality, this was a fantasy. Americans could have a strong, growing economy, which requires immigration to bring in new people and fill demand for labour, or they could finance a deportation force and close the border to everyone but a small, select few. It was a binary choice. Theirs could be an open society or a closed one, but there was no way to get the benefits of the former with the methods of the latter.

Millions of Americans embraced the fantasy. Now, about eight months into Trump’s second term, the reality of the situation is inescapable. As promised, Trump began a campaign of mass deportation. Our cities are crawling with masked federal agents, snatching anyone who looks “illegal” to them. The jobs, however, haven’t arrived. There are fewer manufacturing jobs than in 2024, thanks in part to the President’s tariffs and, well, his immigration policies.

We got a vivid glimpse of what it looks like for harsh immigration policies to undermine growth and investment earlier this month, in Georgia, when immigration officials detained hundreds of South Korean nationals at a battery plant outside Savannah. The workers, who were held for more than a week, described terrible conditions. The consequences of this raid go beyond the trauma inflicted on the workers. The South Korean public is furious. Just weeks ago, the country promised billions of dollars in new investments in the US. “If they detain Koreans like this, how can our companies continue to invest there?” asked Cho Jeongsik, a governing Democratic Party lawmaker.

President Lee Jae Myung warned that if the US continues this harsh treatment of South Korean workers, it might “seriously affect” investment plans. “As things stand, our businesses will hesitate to invest in the US,” he said. One assumes that other countries are taking note and may adjust their plans in response to Trump’s immigration crackdown.

We can see the economic consequences of the President’s immigration policies on the workforce. The construction, agricultural, and hospitality sectors have seen a decline, said a report from the Economic Insights and Research Consulting group. The Congressional Budget Office warned last week that the US population is projected to grow more slowly than expected — and potentially even contract — as a result of deportations and other anti-immigration policies. The result could be higher inflation and lower economic growth. According to an analysis from the Wharton School, the president’s alma mater, a long-term crackdown on immigration could shrink the economy by up to 1% of GDP.

We could also discuss the way that the President’s singular focus on intimidating, harassing and removing immigrants has threatened the livelihoods of countless thousands of America’s farmers. “People don’t understand that if we don’t get more labour, our cows don’t get milked and our crops don’t get picked,” one Pennsylvania dairy farmer told Politico. When you combine Trump’s immigration policies with his large and unpredictable tariffs, you have an approach almost guaranteed to induce stagflation.

None of this comes as a surprise. It is what you should expect from an agenda that simultaneously seeks to close the doors to newcomers, toss out a large number of productive workers, and impose a new mercantilist order on the world. Trump told voters that they could indulge their resentments and still walk away more prosperous. But they can’t.

It’s hard to imagine that Trump cares much whether or not his promises work out for the people who believed them, to say nothing of the nation at large. He already has what he wants: freedom from accountability for a lifetime of lawbreaking and an easy way to line his pockets. The Americans may not profit from his presidency, but he will. Indeed, he already has.

@The New York Times