A lot has been said and heard about President Trump and his administrations trade policies, immigration policies, healthcare reforms and many more such policies that directly impact the American people and the economy. Question is whether it is possible to achieve all of them or what could be the impact of it on the U.S. economy and immigration?
President Trump has always maintained his say that he wants to renegotiate trade policies which will reduce the trade deficit for the U.S. He also wants the manufacturing jobs to be brought back to the United States.
President Trump also has stated in his presidential campaigns that the North American Free Trade Agreement (NAFTA) between the US, Mexico and Canada would be renegotiated to cut down US trade deficits. The white house administration also threatened to withdraw from the South Korea US free trade agreement (KORUS).
All these are happening exactly at the same time when President Trump and his administration are working to cut down immigration. The recent endorsement to the RAISE Act (Reforming American Immigration for a Strong Economy) is one such bill that would cut down legal immigration by 50 %.
The president also recently announced the end of the DACA program which could remove approximately 700,000 young workers from the workforce. Replacing these workers is going to be a huge cost for the economy.
Reports and studies from various business schools show that trade policies and immigration though are not directly related with each other have impacts on the U.S. economy which are said to be connected.
On one hand renegotiating trade policies look good as more goods will be produced in the country which means need for an additional man power. Hence, more Native American people will get a job.
However, increasing number of jobs will increase the wages paid to the US workers. Businesses can then find it expensive to manufacture jobs at competitive prices. The renegotiation in trade policies would mean that businesses can no longer avail the trade protections they get from such policies.
In short, manufacturing goods will become expensive. In such situations, the employers lobby for more immigration as they need more labor force to meet the demands of production. There are reports that show how immigration helps to create jobs for native people.
As the supply of economical labor increases the cost of labor in the production of goods go down and businesses are able to meet the production requirements and demands at low costs.
As a result, when trade is restricted, businesses want more immigration and lobby for it.
Exactly reverse trend follows when the nation opens free trade policies. If local manufacturers cannot compete with foreign firms, they seek to move their production overseas to gain advantage of economy in cost of production. In such situation, businesses support restrictive immigration policies.
Immigration restrictions mean higher labor costs, and this makes firm less competitive at home. Some businesses close due to these high manufacturing costs while some others decide to relocate overseas, taking jobs for both natives and immigrants with them.
Currently, we see this trend in the agricultural industry. Farmers are investing in Latin American countries as they are unable to find the required workers in the United States.
Restrictive immigration means loss of high skilled immigrants too. Reports suggest that many Information Technology firms are starting to move their production and other service departments to other countries who have more liberal laws for high skilled immigrants as well as trade policies.
These trends seem to reduce jobs for native workers. The recently introduced Raise Act and the end of DACA program is expected to only worsen the labor shortages, and will probably cause more businesses to shut their doors or move overseas.
Economist predict that it would be a disaster for the US economy if the Trump administration continues and implements such trade policies and immigration laws. Reports also say that it can push the U.S. economy into another recession and cost millions of jobs.
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