In a recent note, economists at Goldman Sachs delved into the potential impact of U.S. immigration policy before and after the upcoming election, examining scenarios under both the ongoing Biden administration and a potential second Trump administration.
Net immigration to the U.S. rose to about 2.5 million last year, significantly boosting labor force and GDP growth while helping ease pressure on wages. Goldman Sachs estimates net immigration will be about 2 million in 2024, double the pace seen before the pandemic.
The outlook, however, depends on a number of policy decisions taken before and after the elections. President Biden’s recent changes, announced June 4, aim to limit the pipeline that could potentially accommodate 700,000 immigrants annually at current rates of unauthorized migration.
“However, we think the ultimate effect will be only a small part of this, as most affected immigrants will likely try to enter through other means,” Goldman economists wrote. “Legal challenges to the new rules could even block their implementation entirely.”
If President Biden wins a second term, the administration is expected to maintain current immigration policies with minimal changes. The new asylum restrictions, while intended to reduce net unauthorized immigration, face legal and logistical challenges, “but could reduce net unauthorized immigration and limit the potential for positive immigration surprises this year,” Goldman noted.
The policy would set a daily limit of 2,500 unauthorized migrants encountered outside official ports of entry, with any excess being sent back across the border. Given that the daily cap was 3,500 in May, that limit will likely be met immediately, meaning U.S. authorities “will be sending detained migrants back across the border rather than releasing many of them into the U.S. to await trial.”
Goldman Sachs notes that the policy excludes several groups, such as unaccompanied children, victims of brutal human trafficking and other vulnerable migrants. Moreover, the policy does not apply to asylum seekers at official ports of entry, where many who would be affected by the new policy would likely redirect their efforts.
In contrast, a second Trump administration will likely pursue more aggressive immigration restrictions. The range of outcomes under this scenario is wide due to the potential for significant policy changes and legal battles.
Goldman Sachs outlines two main scenarios for net immigration under Trump:
1) High quality script: If courts block major changes to asylum policy and limit the impact of deportations, net immigration could fall to about 1.5 million in 2025. This figure is still roughly double the 2017-2019 average reported by the Congressional Budget Office (CBO).
2) Budget scenario: If the Trump administration successfully implements significant reductions in asylum applications and humanitarian parole, and enacts a more expansive deportation program, net immigration could fall below the 2017-2019 average of 700,000 per year and potentially temporarily approach zero.
“However, it is unlikely that net immigration would be negative year-on-year even under this scenario,” the economists said.
The Trump administration’s proposed deportations face the most uncertainty, with potential deportations ranging from 300,000 to 2.1 million in 2025, according to Goldman.