Decreasing rents. Increasing wages. Maybe restricting immigration is effective.

The Trump administration reports that approximately two million undocumented migrants have left the United States, either through deportation or voluntarily. In addition, tighter restrictions on new visas have been implemented, and citizens from certain nations have been barred from entering the country.

While Donald Trump's second term has been uneven in some areas, on immigration he has fulfilled his campaign promises by sharply reducing the inflow of people.

The economic effects of this policy are beginning to surface, and surprisingly, the signs are positive. It raises the question of whether other advanced economies might see similar benefits if they take a stricter approach to migration.

Immigration was a key factor in Trumps decisive election win. Now, as his second year progresses, data show tangible results: homeland security figures indicate that roughly 500,000 migrants were deported, with an additional 1.5 million leaving voluntarily. Meanwhile, H1-B visa costs have surged to $100,000, limiting the number of foreign workers entering legally.

Projections from the American Enterprise Institute suggest that 2025 net migration could result in either a modest gain of 115,000 or a net loss of 525,000, signaling a dramatic shift for a nation that started the year with over 50 million immigrants.

This reduction contrasts sharply with countries like the UK, where net migration reached around 200,000 last year despite having a smaller population. The data suggest that more people may now be moving to the UK than the US.

Conventional wisdom has long argued that immigration is essential for economic growth: it expands the labor force, prevents worker shortages, provides industry-specific skills, and increases tax revenue. Yet, the US economy appears resilient even with dramatically reduced immigration.

Certain sectors, such as construction, face labor shortages, but overall wages are rising by an average of 4% this year as companies compete for workers. Housing costs are easing as well, with average rents in major cities dropping 1% month-on-month and 5% from 2022 peaks, making homes more affordable.

American businesses are also heavily investing in automation, channeling an estimated $109 billion into domestic AI development and $4 billion monthly into robotics. Despite global challenges like tariffs and falling energy prices, economic growth remains solid, inflation is controlled, and stock markets are hitting record highs.

The USs ability to absorb immigrants is higher than most developed nations due to its size, lighter planning regulations, and lower reliance on welfare. High levels of immigration generally benefit growth, but in this case, strict reductions are yielding unexpectedly positive results.

As some forecasts suggest a potential population decline, the increase in GDP per capita may outpace overall growth, further enhancing living standards. The evidence points to a clear conclusion: lowering immigration is boosting the economy.

For countries like the UK and much of Europe, the lesson is intriguing. Governments often argue for more immigration to sustain growth and public finances. Yet, in the US, fewer arrivals have coincided with rising wages, more affordable housing, and reduced pressure on services. Perhaps a similar strategy could improve living standards overseas.

Author: Lucas Grant