Modelo has been America’s favourite beer ever since Bud Light enraged conservative imbibers in 2023 with a “woke” social-media campaign featuring a trans woman. Now Constellation Brands, which owns the Modelo brand in America, also finds itself a victim of the country’s rightward lurch. According to the company, Hispanic customers, who make up half its total, are staying home and drinking less as they fear being swept up in the federal government’s mass deportations.
Constellation is not the only company losing custom as a result of Donald Trump’s crackdown on unauthorised immigrants. According to Kantar, a data provider, retailers including Home Depot—whose parking lots are a hotspot for arrests by the Immigration and Customs Enforcement (ICE) agency, since migrant labourers look for work there—and Walmart have also seen a decline in in-store business from Hispanic consumers. And Mr Trump’s deportation efforts are just getting started. In the coming days the president may send ICE agents into Chicago alongside the National Guard in order to round up immigrants.
More than the loss of Hispanic customers, the bigger worry for American businesses is what the president’s immigration policy will mean for their ability to find workers. Researchers at the American Enterprise Institute, a think-tank, reckon around 2.5m fewer people will arrive in America this year than in 2024. Whereas economists are hotly debating how much Mr Trump’s immigration policies are contributing to weak jobs growth, the stockmarket has so far shrugged off the risks to America Inc. That may soon change.
For now, it is mostly small firms that are bearing the brunt of Mr Trump’s crackdown on undocumented workers. According to Pew Research Centre the nearly 10m immigrants working illegally in America in 2023 made up a quarter of farm workers and a fifth of those in the construction industry. Raids at farms in California and meatpacking factories in Nebraska have made employers nervous. According to Goldman Sachs, a bank, employment growth has been particularly weak in industries that rely heavily on unauthorised labour. In June Mr Trump teased pausing deportations of farm and hospitality workers, though any amnesty agreement now looks unlikely.
As attention in Washington shifts to legal immigration, big businesses will come under greater pressure. H-1B visas, which have been issued to skilled foreigners since 1990, are in the spotlight. Private-sector visas are capped at 85,000 and distributed through a lottery system. Whereas techies like Elon Musk have defended them as an efficient way of attracting talent, nativist MAGA types think H-1Bs undercut American workers, principally to the benefit of Indians, mostly in the IT industry, who receive three-quarters of the visas.
Tensions are rising again. In July J.D. Vance, the vice-president, criticised big tech for laying off workers while also applying for new H-1Bs. On August 26th Howard Lutnick, the commerce secretary, called the system a “scam”. A “total scam”, parroted Ron DeSantis, the governor of Florida.
They are right that the current H-1B system has been abused. Firms have rigged the lottery by entering the same candidate multiple times. Some do not properly advertise jobs to American workers when they parlay H-1Bs into green cards, as they are obliged to by law. An expected new rule replacing the lottery system with one that favours higher-paid workers is likely to hurt Indian outsourcing firms such as Infosys and Tata Consultancy Services most, but would also create trouble for America’s tech darlings. During the last fiscal year the “magnificent seven” tech giants secured more than 30,000 H-1B visa approvals, including extensions of existing visas. Although some would presumably qualify under a new pay criteria, big tech firms also bring in plenty of less well remunerated workers from abroad.
America’s ability to draw in clever foreigners is one of the country’s greatest strengths. Without it the economy’s dynamism would be severely undermined. Consider what the federal government’s crackdown on immigration could mean for America’s leadership in artificial intelligence (AI). The battle for brain power among AI labs is ferocious. Much of it is imported. A study found that in 2022 fewer than two-fifths of workers at the country’s top AI institutions were of American origin. Many of the rest are second-generation immigrants. What is more, the almighty construction boom needed to build the data centres and power infrastructure AI requires will be cut short if not enough workers can be found. In time, the costs of Mr Trump’s immigrant bashing will become clearer.