Donald Trump speaks during one of his 2024 campaign rallies. The former reality-show star has promised high tariffs on foreign goods, which economists said will worsen inflation. Credit: Shutterstock / Gage Skidmore

The voters have spoken.

Exit poll after exit poll shows Americans gave Donald Trump a second presidential term on his promises that he’ll build a stronger economy. On the campaign trail, the real-estate developer and former reality-show star repeatedly claimed he’d restore low prices and economic stability while creating jobs.

However, economists, immigration experts and political observers warn that the same policies he touted — deporting millions of undocumented workers, imposing stiff tariffs on foreign goods, slashing taxes and eliminating the Affordable Care Act — will worsen inflation and lead to economic chaos.

What’s more, according to experts, those effects will be felt especially profoundly in Texas, where Trump won victory over Vice President Kamala Harris by 14%. The state’s large immigrant population, reliance on foreign trade and other factors make it especially vulnerable.

Deportation devastation

More than 1 in 10 immigrants to the U.S. reside in Texas, or about 5 million people, according to Pew Research. What’s more, the state is home to 1.6 million undocumented people — the second highest number of any state beside California.

Deportations and steep curbs on immigration will spur higher labor costs for both businesses and consumers, said David Macpherson, an economics professor at San Antonio’s Trinity University. And states with large immigration programs will feel those most quickly and most painfully.

“It’s going to affect states like Texas more quickly than it will others,” Macpherson said. “And it’s going to affect us more, especially in those industries where those immigrants make up a large part of the workforce. Like landscaping, agriculture, housekeeping, probably restaurants as well.”

Businesses no longer able to rely on an immigrant workforce will be forced to bring on U.S.-born employees as replacements. But that won’t happen on a one-to-one basis, Macpherson said. U.S.-born workers won’t be drawn to backbreaking low-wage jobs without their pay rising substantially. That means businesses will hire far fewer.

“This is a time in our nation where we need immigration more than ever, because our Baby Boomers are aging, exiting the workforce, and so we have labor shortages in all sectors,” Austin-based immigration attorney Kate Lincoln-Goldfinch said. “So, we know about agriculture, of course, and meat packing … but it also applies to mid-level jobs, up to engineer, STEM, people working in innovation. All of those are in need right now of workers.”

Lincoln-Goldfinch said she expects Texas consumers will see the effect on their pocketbooks as early as mid-2025 as the White House pulls immigrant workers from an already stretched labor market and businesses raise prices to compensate.

The impact will be especially apparent in the construction industry — especially as Texas grapples with an affordable housing crisis, experts warn.

In August, a report from Texas Comptroller Glenn Hegar blamed the state’s housing affordability crunch on a lag in construction. In urban markets such as San Antonio, potential first-time homebuyers are priced out of the market because of insufficient housing stock, while more than half of Texas tenants are paying too much for rent.

Hegar’s prognosis? Texas must build 306,000 more homes if it’s to catch up. It’s hard to imagine that happening with a diminished immigrant labor pool.

“The most obvious initial impacts are going to be on the trade industries,” Lincoln-Goldfinch said. “So, we’ll have plumbing, carpentry and construction slowdowns. We’ll have shortages that will impact development and planning of cities. So, that kind of stuff would start, and then overall, we would just see an economic decline because we can’t fill the jobs that we have.”

Mass deportations would also cut deeply into Texas’ tax revenues, studies show.

Undocumented immigrants in Texas paid $4.9 billion in state and local taxes in 2022, the most recent year for which data is available, according to a recent analysis by the nonpartisan Institute on Taxation and Economic Policy.

That same group also accounted for 6% of total tax revenues collected by the Lone Star State in 2022, according to the Federation of Tax Administrators.

While the administration could backpedal on some of its deportation plans based on blowback from businesses or defeats in the courts, Lincoln-Goldfinch warns that Trump’s previous term shows how far and fast he’s prepared to go.

“He did a lot on January 2017, and then every week after that for the rest of his administration, he did something else,” the attorney said. “There was an action by the Trump administration for one out of every four days during his presidency related to immigration. So, this is just going to be a long road.”

ICE agents conduct a raid. Mass deportations will worsen Texas’ housing crisis by removing immigrant workers from the construction trades, experts caution. Credit: Wikimedia Commons / Immigration and Customs Enforcement

Inflationary tariffs

While some of Trump’s deportation plans may be delayed by court battles, the law gives him the ability to impose trade tariffs at will. That means, assuming his talk of imposing sky-high tariffs on imported goods wasn’t empty, consumers likely will see their effect shortly after Jan. 20.

And the consensus among economists is that the new trade restrictions will hit regular Americans in the pocketbook. Hard.

“It’s insane. These tariffs are just absolutely the stupidest idea,” Trinity economist Macpherson said. “China ain’t paying for those tariffs. We are. It’s like a sales tax. Imagine if you put a 10% to 20% sales tax on anything you buy manufactured abroad.”

For the past century, U.S. administrations have avoided broadly applied tariffs for good reason. The Smoot-Hawley Tariff Act of 1930, adopted to shield American workers from foreign competition, is widely recognized as worsening the Great Depression, Macpherson explained.

He isn’t alone in being alarmed. Sixteen Nobel Prize-winning economists signed a letter this summer warning that Trump’s trade plans would “reignite’’ inflation, which is now down from its 9.1% peak and closing in on the Federal Reserve’s 2% target.

Trump has said he’ll slap a 60% tariff on all goods from China, a tech-manufacturing hub. According to economists, that would almost immediately raise U.S. consumer prices for smartphones, laptops, video game consoles and other popular consumer electronics.

The incoming president has also promised to place a 25% tariff on all Mexican imports, something that will be felt by myriad manufacturers across the state that rely on components shipped in from our southern neighbor. Texas’ ports at Laredo and El Paso are the two busiest on the border, accounting for tens of billions in commerce annually.

While tariffs could yield pushback from powerful business lobbies, Macpherson points to the first Trump administration as evidence that the mercurial president isn’t a good listener.

After taking office, Trump hit Korean washing machine makers LG and Samsung with 50% tariffs in a move he claimed would bolster the fortunes of U.S.-based Whirlpool.

“But then what happened was Whirlpool got mad at Trump because he turned around and slapped tariffs on steel and aluminum, which go into making their washing machines,” Macpherson said. “So, he raised their costs. It’s insane.”

In the end, prices for washing machines and dryers increased by 12% across the board due to Trump’s tariffs, a University of Chicago study showed.

Other countries have already said that if Trump goes through with proposed tariffs, they’ll retaliate, further increasing costs American businesses and consumers pay for foreign goods.

The reaction by the U.S. stock market will be painful and quickly apparent in voters’ 401(k)s and other retirement plans, Macpherson said.

“The stock market will fall, and not just a little,” he added. “I’ve seen simulations indicating a 10% tariff will cause a 10% reduction in stock prices.”

Tax cuts and the ACA

Along with deportations and tariffs unprecedented in the modern era, Trump’s economic campaign promises include not taxing overtime, not taxing tips and not taxing Social Security benefits.

Economists said those too are more likely to trigger chaos than meaningful gains for working Americans.

“If he could pull that off, wow, that’d have a huge impact: a huge budget hole,” Macpherson said. “And it’s going to be even bigger than what you would think, because what salaried people are going to do is they’re also going to demand they get paid by the hour.”

Macpherson continued: “It’s also going to make Social Security less viable, because the income that comes from the taxation of Social Security benefits is no longer going to be there.”

In a resuscitation of an idea he was unable to carry out during his first term, Trump also has pledged to strike down the Affordable Care Act, which now provides insurance for 45 million people, its highest total on record. Once again, the sting would be especially painful in Texas, which has the the country’s largest share of Americans under 65 without health insurance — 19% of its total population.

While the incoming president has said he’ll replace the ACA with something bigger and better, political observers said it’s doubtful he has legislative discipline or the support from Republicans in Congress to make good on that promise.

In the end, the devastating economic impacts of Trump’s plans won’t be borne by the billionaire class that was more than willing to write checks to return him to the White House. Inflation and economic uncertainty hit hardest for those on the bottom rungs of the economic ladder.

“They’ll do away with Obamacare, which a lot of people who voted for Trump rely on for healthcare,” said Laura Barberena, a veteran San Antonio-based Democratic political consultant. “America just reached out and touched a stove they realized was hot.”

Much of Trump’s MAGA base will attempt to blame others for whatever economic hardships ensue during his next administration, according to political experts. But those voters alone weren’t enough to give him a second term.

Those who cast ballots for Trump on a bet he’ll quickly lower prices and deliver a stable economy are likely to retaliate in the midterms if his policies offers up the exact opposite.

“I’m not going to call it buyer’s remorse, because people who voted for Trump knew exactly what they were buying,” Barberena said. “I just don’t think they thought they’d be affected by it. They’re about to find out.”

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This article appears in Oct 30 – Nov 5, 2024.

Sanford Nowlin is editor-in-chief of the San Antonio Current. He holds degrees from Trinity University and the University of Texas at San Antonio, and his work has been featured in Salon, Alternet, Creative...