Krugman: Why mass deportations will drive up your grocery bill

For the past few years, over and over, voters have told pollsters and pundits that they’re hopping mad about inflation. Well, we just elected a president who, if he follows through on two of his central campaign promises — across-the-board tariffs and mass deportation of immigrants lacking permanent legal status — will probably cause soaring inflation.

How will voters react?

I’ve written about the likely inflationary impact of Donald Trump’s policies. All of that still stands. But there’s an issue that I haven’t stressed as much as I probably should have: the specific effects of his proposed deportations on grocery and housing prices, both of which have been political flashpoints.

First, a word about deficits to set the stage: The nonpartisan Committee for a Responsible Federal Budget estimates that Trump’s tax plans would add almost $8 trillion to the debt over the next decade.

Trump has claimed that he can make up for tax cuts with revenue from tariffs and huge cuts in government spending, but those claims are wildly unrealistic.

Inflation roars back

Deficits — contrary to what you sometimes hear — don’t always cause inflation. After the 2008 financial crisis, warnings about deficit-driven inflation proved wrong because (as basic economics predicted) deficits aren’t inflationary in a depressed economy. Even President Joe Biden’s big spending in 2021 took place in an economy with depressed employment, and the inflationary impact was further mitigated by a surge in immigration, which expanded the labor force and helped create the capacity to meet higher demand.

However, with the economy starting from, essentially, full employment in his second term, Trump, with mass deportations, would degrade productive capacity, balloon deficits and — yes — bring inflation roaring back, keeping a grim pledge on punitive immigration policy while breaking one on providing relief to American consumers.

Here’s what I mean: If you’re upset about grocery prices now, see what happens if Trump goes after a huge part of the agricultural workforce; immigrants are around three-quarters of agricultural workers — and roughly half of them lack permanent legal status. (And do you really doubt that many workers legally here will be caught up in Trump’s threatened dragnets?) Immigrants living in the country illegally also play a large role in food processing. For example, they account for an estimated 30% to 50% of workers in meatpacking.

If these workers are deported, the food industry will probably have great difficulty replacing them. Even in the best case, the industry will have to offer much higher wages — and, of course, these higher wages will be passed on in higher prices.

(Oh, and while we produce most of what we eat, we also import a lot of food — whose prices would be raised by tariffs.)

And when it comes to the downstream economic effects of deportations, it’s not just about grocery prices; it’s also about the cost of housing. The answer to that problem is to build more housing units. But immigrants without legal permission are more than a fifth of the construction workforce, so deportations would severely hamper efforts to increase the housing supply. (And no, contrary to what JD Vance said, immigration hasn’t driven the recent spike in housing costs.)

A false promise

Could we easily make up for the loss of these workers by replacing them with native-born workers? No. Employment among native-born adults in their prime working years is higher than it was at any point during Trump’s first term. There just isn’t a large pool of idle but employable native-born Americans to put to work.

What will Trump do if inflation rises? Bear in mind that his campaign was replete with false claims — about immigration, jobs, inflation, crime and more. And one of his go-to tactics for dismissing data that shows his claims are false is to insist that the data is fake.

So if he imposes high tariffs and follows through on his plans for an immigrant dragnet — and a crucial part of our workforce is decimated and Americans start to feel the inflationary consequences — don’t expect Trump to acknowledge that he miscalculated. The far likelier scenario is that he’ll deny reality or blame bad actors and try to order prices back down again. But if you think the president can just wave his hands and bring down the cost of a dozen eggs, I have news for you. (It may be worth noting that Hungary’s prime minister, Viktor Orban, whom Trump admires, has tried to suppress inflation by imposing price controls, which backfired badly.)

And let’s not lose sight of the human component. The prospect of millions of people who’ve come to America to make a better life for themselves being rounded up and shipped out is ghastly. To borrow a phrase, the cruelty of Trump’s proposed deportations is part of the point. But to the extent that Trump has sold the idea that kicking out immigrants who lack permanent legal status would buoy the economic prospects of working- and middle-class Americans, this is yet another case in which his rhetoric, and his math don’t add up.

Inflation is by no means my biggest concern right now. It’s almost trivial compared with the threat that Trump poses — has posed — to our democracy. But it will matter a lot to many Americans, including many who voted for him, and the nation’s future will depend greatly on how they react if they come to find that they bought into a false belief in Trump’s ability to manage the economy.

Paul Krugman is a New York Times columnist.