President Joe Biden delivers a speech on immigration and border security on February 29, 2024 in Olmito, Texas.
Cheney Orr | Getty Images
President Biden’s new term executive order Economists and trade analysts say tightening asylum restrictions at the U.S.-Mexico border could have the double-edged economic effect of tightening the labor market while also easing supply chain bottlenecks between the two countries.
The measure would temporarily bar undocumented immigrants entering the U.S. from the southern border from receiving asylum, except under certain circumstances, and make it easier for Border Patrol agents to quickly expel those people.
The restrictions are triggered when the average number of immigrants encountered per day exceeds 2,500 over a week. The operation will stop two weeks after the government determines that the average daily number of migrant contacts has been below 1,500 for seven consecutive days.
Department of Homeland Security officials told NBC News that currently, the average number of immigrant encounters per day is about 4,000.
As a result, a senior government official told reporters that the temporary ban will take “immediate effect.”
On June 4, 2024, in Ciudad Juarez, Mexico, members of the Texas National Guard stood guard near the barbed wire fence to prevent immigrants from entering the United States.
Jose Luis Gonzalez | Reuters
However, the temporary closure will not hinder trade or travel. It still allows immigrants who entered the United States legally to apply for and receive asylum.
But economists and industry representatives said the move has potential impacts on the U.S. labor market, trade, supply chains and inflation.
“It’s a modest move in terms of immigration changes, so I think it’s going to have only a small impact on job growth and economic expansion,” said Ernie Tedeschi, economics director at the Yale Budget Lab. Desky served as chief economist for the White House Council of Economic Advisers.
Trucks wait in line for border customs inspection to enter the United States at the World Trade Bridge in Nuevo Laredo, Mexico, June 30, 2020.
Daniel Beselier | Reuters
The order is also intended as Biden’s political response to public anger over the wave of undocumented immigrants. That frustration has weighed on voters ahead of Biden’s potential rematch with former President Donald Trump in November.
But border policy also affects the way businesses trade, hire workers and price consumer goods — all of which are related to the health of the U.S. economy.
Experts say the short-term economic impact so far has been relatively small. Specifically, new asylum restrictions could slightly weaken U.S. labor market growth. But they could also help ease supply chain bottlenecks at the border and streamline trade with Mexico.
Will this hurt the economy?
Experts say if new border measures cause any damage to the economy, the pain points are likely to be in the labor market.
If the border is temporarily halted from accepting new asylum seekers under Biden’s executive order, a slowdown in immigration could slightly weaken a strong U.S. labor market that is already showing signs of soften.
“I expect the (employment) numbers to cool off a little bit,” Tedeschi said. “I also expect there will be a lot of immeasurable impacts: For example, businesses are finding it a little harder to find the workers they need to open new locations.”
Migrants awaiting processing by U.S. Immigration Services cross the border fence between Mexico and the United States to talk to aid volunteers on September 22, 2023 in San Diego, California.
Mike Black | Reuters
According to a report, immigrants have added 2 million people to the U.S. labor supply since 2019. April Analysis By Tedeschi. Tedeschi estimates that without immigration, the U.S. labor supply would have declined by 1.2 million people during this period.
“A steady influx of immigrants is critical to ensuring continued growth in the U.S. labor force,” said Brookings Institution economist Tara Watson.
Immigration has also helped drive the U.S. post-pandemic economic recovery faster than the U.S. developed country All over the world, despite all the problems.
Tedeschi estimates that immigrants account for one-fifth of the growth in U.S. gross domestic product due to the pandemic.
Will items become more expensive?
In short, this executive order may not increase inflation.
“The impact of immigration on inflation is unclear because immigration expands supply but also creates additional demand,” Tedeschi explained.
Some experts said the executive order could actually reduce costs by streamlining the U.S.-Mexico supply chain.
Trucks line up near the border fence to cross the United States at the Otay commercial port of entry in Tijuana, Baja California, Mexico, on December 10, 2019.
Guillermo Arias | AFP | Getty Images
Border transportation is sometimes backed up as Customs and Border Protection (CBP) agents are busy processing large numbers of migrants.
“When logistics chains slow down, everyone pays a price,” said Jerry Pacheco, president of the Border Industries Association, a New Mexico trade group that represents more than 100 businesses that rely on Mexican producers.
Rising costs for producers could ripple throughout the economy.
“This is like a hot potato. It’s passed from logistics companies to manufacturers, who pass it to us consumers. This has a profound negative impact on our economy,” Pacheco said.
Biden’s executive order could help eliminate some of these supply chain bottlenecks. By limiting the number of migrants crossing the border, U.S. Customs and Border Protection agents will have more time to facilitate faster transit with Mexico.
“This probably should have been done a year ago, two years ago,” Pacheco said.
Alternatives to Trump
While there are some potential economic silver linings to Biden’s border policies, Pacheco said the best border policies for the economy and workforce would be those that provide long-term solutions to the nation’s “broken immigration and visa system.”
Brookings’ Watson agrees. “A better way to manage the situation at the border is to establish more formal legal pathways,” she said.
At the same time, Biden’s new executive order is expected to have a milder economic and humanitarian impact than the massive border closures and hard-line deportation strategies proposed by Trump and some Republicans.
On April 5, 2019, US President Trump visited the border wall between the United States and Mexico in Calexico, California.
Saul Loeb | AFP | Getty Images
Experts say tough immigration policies could fan the embers of inflation that the Biden administration has been trying to stamp out.
“I always laugh when President Trump says that,” Pacheco quipped, referring to Trump’s promise to close the border.
“I mean, it’s like taking a shotgun instead of a pistol and shooting yourself in the knee.”
A spokesman for the Trump campaign did not immediately respond to CNBC’s request for comment on how Trump’s immigration proposals would affect inflation and the cost of goods.