The United States economy relies heavily on immigrants. Like most native-born Americans, they contribute to economic growth through their work, spending and tax payments.

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But US President Donald Trump wasted no time after Monday’s inauguration implementing many of his campaign pledges, including on immigration.

Trump signed a series of orders that signal a dramatic change to immigration policy and will usher in new limits to both legal and illegal immigration.

The precise impact of immigration on the economy, however, is now again under the microscope. There is widespread praise from businesses and economic elites for immigration's ability to fill open positions.

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However, trump and his supporters claim that foreign nationals are stealing jobs and earnings from Americans. Let's look at the impact on the American economy.

Roughly one out of every five employees in the United States is an immigrant, and the government estimates that number to be over 32 million.

An estimated 11 million people entered the country illegally between 2005 and 2022. Almost 8 million are employed, making up about a quarter of the foreign-born workforce.

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Now, the real question is - Are they really “taking” jobs from Americans? 

The economy is not a zero-sum game. In industries where the need for labour frequently exceeds the supply of native-born workers, foreign-born individuals are more prevalent.

Accordingly, economists agree that immigration mitigates the impact of severe labour shortages.

Chair Jerome Powell said the US has been "getting that supply" and why the economy has often surpassed projections. A point repeatedly made by Federal Reserve officials as well.

Immigrants also increase demand for products and services, which often leads to the indirect creation of jobs for native Americans.

Economists' "million-dollar question" on immigration has been the effect that foreigners have on American wages.

In 2024, the CBO issued a warning that due to an increase in migrants, salaries will not rise as quickly over the following decade. This is partly because there will be more low-skilled workers.

However, comprehensive research conducted by the National Academies of Sciences, Engineering, and Medicine found that when looking at salaries of native-born workers over a period of 10 years or more, the influence of immigration is often "very small."

The next question is - How do high-skilled immigrants affect the economy?

Many of the world's most brilliant people have sought refuge in the United States and have been the backbone of many successful companies.

As of 2022, the Migration Policy Institute reported that there were over 14 million immigrants in the US With a bachelor's degree or above.

They constitute over 30 per cent of the overall college-educated population. They are also heavily concentrated in white-collar centres like New York and California.

The United States is also home to around one million overseas students.

According to economists from the National Bureau of Economic Research, the country's innovative spirit has benefited greatly from immigration.

A third of the new patents issued in the US In the past thirty years have been attributed to immigrants. That even though immigrants make up only 16 per cent of the country's innovators.

Economists see Trump’s mass deportation plan as costly both in the short and long term.

(With the inputs from the agencies)