The retailer has sold Trump-branded clothes since 2004 and Mr Trump has appeared in the company's commercials. Macy's is the latest company to distance itself from the businessman.
TV networks NBC and Univision said they would not air the Miss USA pageant, which is co-owned by Mr Trump.
"We have no tolerance for discrimination in any form," Macy's said in a statement."We welcome all customers, and respect for the dignity of all people is a cornerstone of our culture."
In response, Mr Trump said his principles were more valuable than the clothing line, which he called a "small business in terms of dollar volume".
On Wednesday, Macy's began selling Trump products at a steep discount on its website.Mr Trump made the comments about immigrants when he launched his campaign for president and has stood by the remark amid the backlash.
"They're bringing drugs, they're bringing crime, they're rapists, and some I assume are good people, but I speak to border guards, and they tell us what we are getting," he said in his speech on 16 June.
While the controversy has hurt Mr Trump financially, his comments have not adversely affected his presidential ambitions.
Recent polls show he is performing well in Iowa, one of the first US states to hold a Republican primary contest. One poll put him in second place after former Florida Governor Jeb Bush amid a crowded field of candidates.
bbc.com
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