Trump's Immigration Enforcement Changes Can Transform These Economic Sectors
Legislative changes designed to curb immigration are starting to be felt across the economy.
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Trying to leave aside any political commentary around immigration policies either by the current or former presidential administration, potential changes in migration patterns are likely to have increasing impacts across the economy.
Following significant funding increases within the recently passed FY2026 federal budget for immigration enforcement and legislation that included funding for an additional 10,000 ICE agents, investors can look to several sectors for significant change.
Today, I will take a stab at highlighting some of the most likely market impacts of this new legislation.
One of the obvious effects of changing migration policy could be a drop in remittances to countries like Mexico, which took in some $64.7 billion of these fund transfers in 2024. These remittances fell just over 16% in June from the same month a year ago.
This is the biggest year-over-year plunge in over a decade, which includes the Covid pandemic. This will have a negative impact on Mexico’s economy, which is already struggling with the new trade policies of the current administration. This trend will also present headwinds to companies like MoneyGram MGI and Western Union WU.
Sales of Mexican beer brands like Modelo are also falling, a headwind for the likes of Constellation Brands, Inc. STZ, whose shares are down nearly 30% to date.
Migration outflows could lead to increasing challenges filling positions in industries such as home building, agriculture, landscaping, hospitality, gig and delivery businesses and meat packing, among other job sectors. This could help push up wage inflation. On the flip side, the reversal of recent migration flows could result in lower rental inflation. Especially combined with the record number of apartments that came online in 2023 and 2024 as well as the over 7 million Baby Boomers who are projected to leave us over the next two years. And remember that the shelter component is by far the largest factor in calculating the monthly CPI reading.
Finally, a reversal of recent migration should be a positive overall for many states and cities budgets. As but one example, the average cost per year of K-12 education has reached just over $17,000 annually nationwide.
New York City, as of August 2024, had spent nearly $5.5 billion on new arrivals during the previous administration, according to the New York Post. Due to falling immigration, the governor of Massachusetts just announced the shutting of all hotel shelters across the state.
In conclusion, recent changes in immigration policies are going to increasingly ripple across the economy and investors should be aware of these trends.
At the time of publication, Jensen had no positions in any securities mentioned.
