US President-elect Donald Trump’s plans to curb immigration and undertake a mass deportation of undocumented migrants could boost labour supply in countries that are the source of migrants. But there could be social and fiscal costs, as well as lower remittances. The latter is a particularly big threat for the economies of Central America. Irrespective of what policies emerge, migration is likely to be a key source of tension between the US and Mexico and Central America which could raise the threat of targeted tariffs or sanctions that exacerbate any economic cost from more protectionist US trade policy.
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