HOUSTON — BlackRock CEO Larry Fink said Monday that President Donald Trump’s deportation policy will have a severe impact on the agriculture and construction sectors, which could lead to elevated inflation in the near term.
“I think that over the next six to nine months, we’re going to see a little more elevated inflation,” Fink said the CERAWeek by S&P Global energy conference. “I do believe deportations and the speed at which it is happening is going to have severe impacts on the agricultural sector and the construction sector.”
Fink said CEOs in the agriculture sector have told him that about 70% of the men and women who work in the industry were not born in the U.S. This raises the question of whether the U.S. will have enough labor to harvest the crops when spring arrives, Fink said.
“With the whole idea that we’re going to have to use private capital to build out this economy — are we going to have enough workers,” Fink asked. “I’ve even told members of the Trump team that we’re going to run out of electricians as we build out AI data centers — we just don’t have enough,” the CEO said.
This potential labor shortage will contribute to inflation, Fink said. Over the longer term, however, the U.S. could see “big deflation because of the advancement of AI and robots and how that’s going to reshape the economy,” the CEO said.
The deflationary pressure that the U.S. experienced over the past two decades was due in part to the importation of cheaper goods from overseas though this hurt U.S. workers, Fink said. The shift to rising nationalism around the world will have an impact on prices, he said.
“When I go to Washington, they talk about these policies,” Fink said. “I ask at what cost are you willing to tolerate that. “Yes, we may have opportunities to create better and more robust jobs, but then the offside of that will be, it will probably create a little more elevated inflation in the short run.”
Trump’s deportation policy is occurring at the same time the president is imposing tariffs on major U.S. trade partners. The president has slapped 20% tariffs on China. He has paused tariffs on Mexican and Canadian goods that are compliant with the deal that governs trade in North America. But Trump is threatening what he calls “reciprocal tariffs” in April.
