In one of his first actions upon returning to the Oval Office this week, President Trump directed federal agencies to explore measures to ease consumer prices in the U.S. However, experts caution that his administration's strict immigration policies could increase inflation and negatively impact various industries by reducing the nation's workforce.

“A reduced labor supply exerts upward pressure on wages, which can lead to inflation, particularly in sectors like food,” said Stephen Brown, deputy chief North America economist at Capital Economics, in an interview with CBS MoneyWatch.

David Bier, director of immigration studies at the Cato Institute, echoed this sentiment, warning that labor shortages stemming from mass deportations could disrupt production and services. “If jobs remain unfilled and production can’t keep pace with demand, prices will inevitably rise,” he explained.

Which Industries Depend Most on Immigrant Labor?

According to estimates from the nonpartisan Center for Migration Studies of New York, approximately 8.3 million undocumented immigrants work in the U.S., comprising over 5% of the country’s workforce. Several sectors are particularly reliant on this labor force:

1. Agriculture
   Undocumented immigrants make up about 20% of the agriculture industry’s overall workforce, a figure that can rise to 50% for certain specialty farms. Labor-intensive tasks like harvesting delicate fruits are especially vulnerable to labor shortages, which could lead to price increases in the fresh produce aisle. “The impact on food prices would primarily affect fresh fruits rather than ingredients in processed foods,” Brown noted.

2. Construction and Landscaping
   Construction, home renovation, and landscaping companies are also heavily dependent on undocumented workers. A crackdown on immigration could result in labor shortages, pushing up costs and potentially making home improvement projects unaffordable for many. “The lack of labor supply in these sectors could significantly impact both prices and project timelines,” Brown said.

3. Hospitality and Food Service
   Restaurants and food service businesses are another sector at risk, given their reliance on undocumented workers. A labor shortage in this industry could force businesses to raise wages to attract workers, leading to higher menu prices. Smaller eateries, in particular, may struggle to absorb these costs and could face closure. “In many cases, these businesses can’t afford to bid up wages, so they might simply shut down due to labor shortages,” Brown added.

Broader Economic Implications

The effects of deporting undocumented workers would ripple through the economy, impacting both immigrant and native-born workers. For instance, the construction industry employs about 2 million undocumented workers, but their managers and supervisors—typically U.S.-born—could see reduced opportunities if labor shortages disrupt operations.

“A lot of immigrants do jobs that support jobs held by Americans,” Bier said. “In industries like hospitality, where Americans are often in management roles, removing workers could result in fewer positions for those supervisors, causing economic consequences across the board.”

Some roles, such as those in farming, may face challenges even with wage increases. “In jobs like harvesting crops, higher pay may not be enough to attract U.S.-born workers, leading to a lack of available labor in the short term,” said Julia Gelatt, associate director of the Migration Policy Institute’s U.S. immigration policy program.

Ultimately, experts warn that restricting immigration could lead to higher costs for everyday essentials such as food, housing, and travel—precisely the areas Americans hope to see lower prices. The economic fallout could be far-reaching and more complex than initially anticipated.