[ST. PAUL, MN] – Governor Tim Walz, alongside the Minnesota Department of Employment and Economic Development (DEED) and local business owners, today warned of the real and growing impact that the presence of federal agents in Minnesota is having on local businesses. The impact has been felt particularly by immigrant-owned businesses, causing reduced foot traffic, staffing challenges, lost revenue, and increased fear and uncertainty.

"Small business owners represent the American Dream – and this fear and uncertainty is crushing all the hard work they've put into building their business, supporting their employees, and enriching their communities," said Governor Tim Walz. "When people are afraid to go to work, afraid to shop, or afraid to gather in their community, it hurts families, neighborhoods, and our entire economy. Minnesota must remain a place where businesses can thrive and where everyone feels safe contributing to our shared success."

"In addition to the other traumatic impacts to our communities, these federal actions continue to have a chilling effect on Minnesota's economy, especially for small businesses," said DEED Commissioner Varilek. "The Governor's Shop Local campaign has been well received and impactful – even so, we hear daily from entrepreneurs, workers, and support organizations who say their own federal government is deeply harming their individual livelihoods and the state's economy as a whole."

"What we are experiencing from the expanded federal immigration enforcement presence is not just a momentary disruption; it is a threat to the stability of our employees, our businesses, our city and the broader local economy," said Saed Wadi, owner of World Street Kitchen, Milkjam, and Saffron. "Financial losses are certainly part of the story – we've seen foot traffic decline and economic activity slow – but the uncertainty is affecting future growth, too. January and February are typically when we book a large share of summer catering events, but this year, bookings have dropped significantly as customers hesitate to make commitments. Many of us feel our community's sense of safety and normal economic life has been deeply disrupted."

A January survey conducted by the Latino Economic Development Center in St. Paul found that 44% of surveyed businesses had temporarily closed, while fewer than 20% were operating normally. Nearly 40% said they could remain viable with outside support, 25% reported downsizing staff to stay open, and 9% were considering permanent closure.

According to City of Minneapolis estimates, businesses are losing $10 million to $20 million in revenue each week, with the Lake Street corridor losing $46 million between December 2025 and January 2026. A Meet Minneapolis survey found that 90% of restaurants, hotels, retail, and service providers have been impacted, 72% reported staffing absenteeism, and 90% said fear and stress are affecting operations.

The economic impacts extend beyond retail and hospitality. Twin Cities home builders and developers report project delays and workforce shortages, contributing to reduced rental income and slowed home listings. Pending home sales in the Twin Cities metro fell 19.2% last month, compared to a 1.6% national decline, according to Redfin.

Governor Walz proclaimed February as Shop Local Month in Minnesota, encouraging community support for small businesses and connecting owners with available resources.

Governor Walz also emphasized the need to address these economic and workforce impacts during the upcoming legislative session.