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Donald Trump cries “invasion” to justify an immigration crackdown

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AN “INVASION”. That’s how Donald Trump describes migration across America’s southern border. “For American citizens, January 20th 2025 is Liberation Day,” he said in his inaugural address. The notion that America is being invaded is the defining theme of ten executive orders on immigration and border enforcement he signed on his first day in office. This is despite the fact that encounters at the border are the lowest they have been in four years. The orders fall into three categories: the rescission of Joe Biden’s policies and reinstatement of Mr Trump’s first-term plans; flashy things that sound tough; and extreme measures that range from probably illegal to flagrantly unconstitutional.

In the first group Mr Trump issued a sweeping order that aims to increase detention, coerce countries to take back their citizens, encourage local police to help with immigration enforcement and punish sanctuary cities, among other things. He resurrected Remain in Mexico, a policy he introduced in 2019 that forced migrants to wait on the other side of the border while their asylum claims were adjudicated.

He also shut down CBP One, an app set up by the Biden administration that helped migrants schedule appointments to apply for asylum. Migrants already in the queue found their meetings abruptly cancelled after Mr Trump took office. During his first term, the number of refugees relocated to America plummeted. This time he suspended all refugee resettlement for at least three months. Another order increases vetting for migrants and directs agencies to identify whether there are countries from which travel should be prohibited, perhaps a prelude to a ban like the one Mr Trump imposed on arrivals from mostly Muslim-majority countries in 2017.

Some orders sound harsh but may not change much. One that demands physical border barriers, detention and deportation is “just calling for enforcing laws that are already on the books”, says Julia Gelatt of the Migration Policy Institute, a think-tank. Additionally, Mr Trump declared a national emergency at the southern border, which allows the defence secretary to send troops to help secure the frontier with Mexico. George W. Bush and Barack Obama did something similar. Federal law limits soldiers’ roles in domestic affairs to non-law-enforcement activities such as transport and logistical support, rather than actually arresting migrants. The national emergency also unlocks funds from the Department of Defence for the fortification of the border wall, a move the president made in 2019, too.

That leaves the most extreme orders. One aims to end birthright citizenship, which is enshrined in the 14th Amendment . The new president kickstarted the lengthy process of classifying drug cartels as foreign terrorist organisations and directed top officials to prepare for the possibility that he will invoke the Alien Enemies Act, the only piece of the Alien and Sedition Acts, passed in 1798 when America was feuding with France, that was not repealed or allowed to lapse. It permits the president to summarily detain and deport citizens of countries at war with America. Yet America is not at war, and drug gangs are not sovereign states, even if they do control some territory.

This is where Mr Trump’s talk of an “invasion” becomes more than rhetorical bombast. Framing the cartels as terrorists invading America is meant to legitimise his use of the law. And because America is being invaded, Mr Trump argues, he can block anyone from crossing the border. The courts may not see it that way.

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Economics

The low-end consumer is about to feel the pinch as Trump restarts student loan collections

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Andersen Ross Photography Inc | Digitalvision | Getty Images

Wall Street is warning that the U.S. Department of Education’s crack down on student loan repayments may take billions of dollars out of consumers’ pockets and hit low income Americans particularly hard.

The department has restarted collections on defaulted student loans under President Donald Trump this month. For first time in around five years, borrowers who haven’t kept up with their bills could see their wages taken or face other punishments.

Using a range of interest rates and lengths of repayment plans, JPMorgan estimated that disposable personal income could be collectively cut by between $3.1 billion and $8.5 billion every month due to collections, according to Murat Tasci, senior U.S. economist at the bank and a Cleveland Federal Reserve alum.

If that all surfaced in one quarter, collections on defaulted and seriously delinquent loans alone would slash between 0.7% and 1.8% from disposable personal income year-over-year, he said.

This policy change may strain consumers who are already stressed out by Trump’s tariff plan and high prices from years of runaway inflation. These factors can help explain why closely followed consumer sentiment data compiled by the University of Michigan has been hitting some of its lowest levels in its seven-decade history in the past two months.

“You have a number of these pressure points rising,” said Jeffrey Roach, chief economist at LPL Financial. “Perhaps in aggregate, it’s enough to quash some of these spending numbers.”

Bank of America said this push to collect could particularly weigh on groups that are on more precarious financial footing. “We believe resumption of student loan payments will have knock-on effects on broader consumer finances, most especially for the subprime consumer segment,” Bank of America analyst Mihir Bhatia wrote to clients.

Economic impact

Student loans account for just 9% of all outstanding consumer debt, according to Bank of America. But when excluding mortgages, that share shoots up to 30%.

Total outstanding student loan debt sat at $1.6 trillion at the end of March, an increase of half a trillion dollars in the last decade.

The New York Fed estimates that nearly one of every four borrowers required to make payments are currently behind. When the federal government began reporting loans as delinquent in the first quarter of this year, the share of debt holders in this boat jumped up to 8% from around 0.5% in the prior three-month period.

To be sure, delinquency is not the same thing as default. Delinquency refers to any loan with a past-due payment, while defaulting is more specific and tied to not making a delayed payment with a period of time set by the provider. The latter is considered more serious and carries consequences such as wage garnishment. If seriously delinquent borrowers also defaulted, JPMorgan projected that almost 25% of all student loans would be in the latter category.

JPMorgan’s Tasci pointed out that not all borrowers have wages or Social Security earnings to take, which can mitigate the firm’s total estimates. Some borrowers may resume payments with collections beginning, though Tasci noted that would likely also eat into discretionary spending.

Trump’s promise to reduce taxes on overtime and tips, if successful, could also help erase some effects of wage garnishment on poorer Americans.

Still, the expected hit to discretionary income is worrisome as Wall Street wonders if the economy can skirt a recession. Much hope has been placed on the ability of consumers to keep spending even if higher tariffs push product prices higher or if the labor market weakens.

LPL’s Roach sees this as less of an issue. He said the postpandemic economy has largely been propped up by high-income earners, who have done the bulk of the spending. This means the tide-change for student loan holders may not hurt the macroeconomic picture too much, he said.

“It’s hard to say if there’s a consensus view on this yet,” Roach said. “But I would say the student loan story is not as important as perhaps some of the other stories, just because those who hold student loans are not necessarily the drivers of the overall economy.”

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Economics

Consumer sentiment falls in May as Americans’ inflation expectations jump after tariffs

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A woman walks in an aisle of a Walmart supermarket in Houston, Texas, on May 15, 2025.

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U.S. consumers are becoming increasingly worried that tariffs will lead to higher inflation, according to a University of Michigan survey released Friday.

The index of consumer sentiment dropped to 50.8, down from 52.2 in April, in the preliminary reading for May. That is the second-lowest reading on record, behind June 2022.

The outlook for price changes also moved in the wrong direction. Year-ahead inflation expectations rose to 7.3% from 6.5% last month, while long-term inflation expectations ticked up to 4.6% from 4.4%.

However, the majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries. The trade situation appears to be a key factor weighing on consumer sentiment.

“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Surveys of Consumers director Joanne Hsu said in the release.

Inflation expectations are closely watched by investors and policymakers. Federal Reserve Chair Jerome Powell has said the central bank wants to make sure long-term inflation expectations do not rise because of tariffs before resuming rate cuts.

A final consumer sentiment index for the month is slated to be released on May 30, and will likely be closely watched to see if the tariff pause led to an improvement in sentiment.

This is breaking news. Please refresh for updates.

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Economics

JPMorgan Chase CEO Jamie Dimon says recession is still on the table for U.S.

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Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the 2025 National Retirement Summit in Washington, DC, US, on Wednesday, March 12, 2025.

Al Drago | Bloomberg | Getty Images

Wall Street titan Jamie Dimon said Thursday that a recession is still a serious possibility for the United States, even after the recent rollback of tariffs on China.

“If there’s a recession, I don’t know how big it will be or how long it will last. Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” the JPMorgan Chase CEO said in an interview with Bloomberg Television.

Specifically, Dimon said he would defer to his bank’s economists, who put recession odds at close to a toss-up. Michael Feroli, the firm’s chief U.S. economist, said in a note to clients on Tuesday that the recession outlook is “still elevated, but now below 50%.”

Dimon’s comments come less than a week after the U.S. and China announced that they were sharply reducing tariffs on one another for 90 days. The U.S. has also implemented a 90-day pause for many tariffs on other nations.

Thursday’s comments mark a change for Dimon, who said last month before the China truce that a recession was likely.

He also said there is still “uncertainty” on the tariff front but the pauses are a positive for the economy and market.

“I think the right thing to do is to back off some of that stuff and engage in conversation,” Dimon said.

However, even with the tariff pauses, the import taxes on goods entering the United States are now sharply higher than they were last year and could cause economic damage, according to Dimon.

“Even at this level, you see people holding back on investment and thinking through what they want to do,” Dimon said.

— CNBC’s Michael Bloom contributed reporting.

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