Minnesota Gov. Tim Walz is proposing $10 million in state funds to assist small businesses affected by recent federal immigration enforcement actions in Minneapolis, arguing that Washington should compensate local companies for economic losses tied to ICE operations.

Walz made the remarks after White House advisor Tom Homan announced Thursday that most ICE officers would be withdrawn from Minneapolis following the arrest of more than 4,000 illegal migrants. Reacting to the enforcement effort, Walz said, “They left us with economic ruin.”

The governor said his administration is prioritizing financial relief for businesses impacted by the raids, particularly immigrant-owned enterprises. “One of the first things we can do, and what we’re focusing on today, is: What can we start doing on the economic recovery, the damage that has been done to our economy, specifically to small business owners, and even more specifically, to immigrant small business owners … The federal government needs to pay for what they broke here.”

Matt Varilek, an economic development official in Walz’s administration, said many local companies are struggling due to the enforcement actions. “Many Minnesota businesses – especially small businesses — are facing economic hardships that may prove insurmountable” as a result of federal activity, he said.

He added that the impact has been widespread. “The massive negative economic impact that is resulting from the fact that a lot of [company] workers don’t feel comfortable showing up, a lot of customers don’t feel comfortable showing up, and so we’re seeing massive reductions in that foot traffic, massive reductions in revenue.”

Henry Garcia, a Colombian migrant who manages a grocery store in St. Paul, said his business has been severely affected. “My customers are afraid to go shopping,” Garcia said, explaining that his sales have fallen by roughly half, even though some white Minneapolis residents have begun shopping at his store.

He described the shift in business conditions following increased ICE activity. “Since federal ICE activity increased late last year, everything changed .. My customers are afraid to go in shopping. … Sales dropped by half, and goodwill doesn’t cover rent … We need more [grants].”

Throughout his public comments, Walz praised immigrants broadly, without distinguishing between those in the country legally and those who entered illegally.

He framed immigration as central to American identity. “Immigrant small business owners, which … for most of our history, [are] the epitome of the American Dream: ‘Come to this country with nothing and build something to be proud!’”

Addressing immigrant communities directly, Walz said, “I want to speak directly to Minnesota’s immigrant community, by extension, America’s immigrant community. We see you, we hear you, we value everything that you bring … We believe in those words. ‘Give us your tired, your poor, your huddled masses, yearning to be breathe free.’”

Walz also emphasized the broader role of immigration in shaping the state and nation. “There is no Minnesota without our immigrant community,” he said, adding that “immigration is the core of who we are.”

The debate comes amid broader disputes over so-called “Sanctuary City” policies, which critics argue create economic systems dependent on migrant labor and consumer bases. Supporters counter that immigrant communities fuel local business growth and contribute to cultural and economic vitality.

In Minneapolis, supporters of the governor point to the growth of immigrant-owned restaurants and retail establishments. Walz highlighted what he described as “a food scene across this state that is second to none.”

The New York Times recently profiled Oscar Murcia, who arrived in St. Paul from El Salvador in 2000 and later opened a restaurant and bakery called El Guanaco. As federal enforcement increased in December, customer traffic at his Minneapolis location reportedly fell 80 percent, prompting its closure. He has reduced hours and staff at other locations and sought relief from landlords and lenders. According to the report, four of his 64 employees were detained, despite having work permits and pending asylum cases.

Critics argue that enforcement of immigration laws is restoring federal authority in cities that had previously limited cooperation with ICE. They contend that tighter enforcement is reshaping local labor markets and housing dynamics in cities such as Minneapolis, Los Angeles, and Chicago.

In Minneapolis, median income stood at approximately $52,000 in 2024, while annual rent costs climbed to around $16,500. According to the National Low Income Housing Coalition, three full-time minimum-wage jobs are needed to afford a two-bedroom apartment in the city. In 2023, Minnesota ranked fortieth among states in median household income growth.

Meanwhile, Walz on Thursday said his administration wants to participate in a federal investigation into alleged fraud involving Somali-operated programs that received federal funds. The probe is expected to examine whether large sums of taxpayer money were misused, and several individuals reportedly face potential criminal charges.

President Donald Trump, for his part, has promoted a different economic approach focused on productivity and technology. Speaking to Breitbart News in August, Trump said, “We’re going to need robots … to make our economy run because we do not have enough people,” adding, “So we have to get efficient … we’ll probably add to [the existing workforce] through robotically—it’s going to be robotically … It’s going to be big. Then, somebody is going to have to make the robots. The whole thing, it feeds on itself … we’re going to streamline things. We need efficiency.”

Supporters of Trump’s immigration enforcement say it is part of a broader strategy aimed at tightening labor markets and raising wages for American workers. RestaurantBusinessOnline.com reported January 23: “Fewer workers mean restaurants will once again have to compete for employees the only way they can, by paying higher wages. Wages over the next two years are expected to accelerate, according to Oxford Economics, from 3.7% this year to 5.6% by 2027.”

The clash between the two approaches reflects a deeper divide over immigration policy and economic priorities, with Walz and other Democrats favoring expanded protections and benefits for immigrant communities, and Trump emphasizing enforcement, reduced migration, and productivity-driven growth.