On June 4, President Joe Biden signed an executive order that severely restricts the influx of refugees.
This is to control those who are crossing the Mexican border into the U.S. to escape the economic ruins of Central and South America.
This gesture appeases voters who are shivering at the influx of Central and South American refugees ahead of the June 5 presidential election.
However, predictions are emerging that controlling refugees could stimulate U.S. inflation again, potentially becoming a boomerang that blocks President Biden’s reelection.
Refugee Restriction
Refugees typically stay in the U.S. while waiting for the results of the refugee application process, which usually takes several years.
However, Biden signed an executive order that allows immigration officials to immediately refuse refugee applications at the Mexican border.
The number of refugees entering the U.S. through the Mexican border exceeds an average of 2,500 per week.
With Biden’s signature on the executive order, the administration can immediately stop such refugee influx.
Inflation Promotion
However, according to Barron’s, if the influx of refugees stops, it could create inflation in the U.S. again.
Standard Chartered (SC) pointed out in a recent analysis note that half of the expansion of the U.S. labor force since October 2023 was comprised of those without proper documentation.
Although the issue of immigration influx is among voters’ top concerns, limiting immigration could cause problems with labor force growth in the long run. This will eventually lead to wage increases that trigger inflation.
According to SC, excluding these ineligible workers would reduce the monthly average number of new hires in the U.S. from 231,000 to 125,000.
SC warned that if labor supply takes a hit, optimistic forecasts for slowing inflation could also be disrupted.
Legality in Question
There are also questions about the legality of Biden’s refugee restriction executive order.
Pro-immigration groups have already announced that they have filed a lawsuit claiming that Biden’s executive order is illegal.
Former President Donald Trump also lost a lawsuit over an immigration restriction executive order.
During Trump’s first term, Trump frequently issued harsh executive orders to limit immigration but consistently lost in court.
The court deemed his executive orders as overreaching.
Meanwhile, Biden is also raising tariffs to counter Trump’s calling for high tariffs.
In May, Biden imposed $18 billion in tariffs on Chinese products, including steel and electric vehicles.
However, there are high concerns that this, too, could have the side effect of pulling up U.S. inflation.
