Trump 2.0 immigration policies: the end of the American Dream?

The effects of the measures described in the previous section have already begun to be reflected in US demographic and labour dynamics. Using the latest population projections by the Congressional Budget Office (CBO) as a reference, the advent of the second Trump administration has led to a significant reduction in projected net immigration flows for the coming years (see first chart). Although the CBO had already anticipated a normalisation of flows following the high levels of previous years, in September 2025 it lowered its net immigration forecast for that year by 1.6 million compared to the figure published in January. Overall, cumulative net immigration between 2025 and 2030 is expected to be approximately 3.5 million lower than anticipated prior to the current administration.1 This revision is particularly relevant because the country is currently in a phase in which immigration is crucial for sustaining population growth. Indeed, this dependency will intensify from 2030, when, according to the CBO itself, deaths will outnumber births and the natural balance will become negative (see second chart).

The implications of this shift go beyond the demographic dimension and directly affect the labour market. Immigrants account for around one-fifth of the US labour force (19.1% in 2025) and they played a crucial role in the post-pandemic employment growth.2 However, the growth of the foreign-born workforce has moderated sharply since 2025, in line with the slowdown in migration flows. Some estimates attribute between 40% and 60% of the slowdown in non-farm job creation observed during 2025 to reduced immigration, although the broader weakening of the demand for labour also played a significant role.3 While there is currently no widespread labour shortage or any significant impact on overall wages, the effects are already visible in certain sectors and regions where the percentage of foreign labour is higher. The Federal Reserve’s Beige Book from October 2025 already identified labour supply tensions in agriculture, construction, hospitality and manufacturing associated with changes in migration policy, with explicit mentions of hiring difficulties, delays in certain projects and wage pressures in specific regional markets. These developments have also been documented in subsequent reports.4

An additional channel affects the US’ ability to attract international talent. Migration restrictions have not been limited to lower-skilled jobs: they also affect students, researchers and highly educated workers. In the university sector, new international enrolments fell by 17% in autumn 2025, with surveyed institutions citing difficulties obtaining visas and travel restrictions as key factors.5 This setback is particularly significant because universities are one of the main gateways to the job market for international talent and represent an essential source of human capital for knowledge-intensive sectors.6 In addition, new restrictions and increased bureaucratic requirements for certain academic and professional visas have led to heightened uncertainty in fields such as technology, finance, scientific research and advanced innovation. It is still too early to conclude that talent is shifting towards other destinations. However, if this trend consolidates, it could limit the availability of the human capital needed to fully leverage the current investment cycle in AI and translate it into productivity gains.7

Experience suggests that migration restrictions rarely eliminate the economic needs that drive population movements. In the US, both the Chinese Exclusion Act of 1882 and the termination of the Bracero programme in 1964 were partly justified by the expectation of improving job opportunities for the native population.8 However, subsequent evidence indicates limited effects on wages and employment, while the main adjustments occurred through technological changes, the reorganisation of production or reduced economic activity in the most affected areas.9 Although it pertains to a different institutional context, Britain’s experience after Brexit points in a similar direction. The end of the free movement of European workers in January 2021 led to a sharp drop in immigration from the EU and labour supply tensions in certain sectors, especially those most reliant on EU workers.10 However, part of this decline was later offset by an increase in non-EU immigrants, with no available evidence indicating widespread improvements in employment or wages for the native population attributable to stricter migration policies.

The main lesson is that an effective migration policy requires more than just entry restrictions. It also requires credible mechanisms for enforcing legislation, legal certainty for workers and businesses, and cooperation with neighbouring countries to manage flows that are driven by long-term economic and demographic forces. Furthermore, the loss of competitiveness relative to China in some US industrial sectors can hardly be explained by immigration. Innovative capacity, infrastructure, institutional quality, the availability of suitable human capital, and the strength of technological and industrial ecosystems appear to be much more decisive factors in explaining an economy’s competitive position. In this regard, migration policy can complement a competitiveness strategy, but it cannot replace it.

In a context of an ageing population,11 the question is not so much whether the US will remain a nation of immigrants, but whether it will retain the ability to attract and retain the talent and workforce that have historically contributed to its economic dynamism and competitiveness, and thereby, its status as a land of opportunities.12 The EU could seize this opportunity to advance its ambitious – and necessary – competitiveness agenda,13 perhaps laying the foundations for a European Dream.