Sheinbaum activates plan to repeal Trump's remittance tax

In response to the enactment of the U.S. law taxing cash remittances, President Claudia Sheinbaum's administration has activated a strategic contingency plan, abandoning the initial idea of ​​a refund to focus on a proactive financial inclusion solution.

The Mexican government's response to Donald Trump's new tax policy has evolved from a reactive stance to a calculated strategy. From the outset, President Claudia Sheinbaum described the tax proposal as discriminatory and argued that it violates a double taxation treaty signed between the two countries in 1994, a position supported by the Ministry of Finance.

Initially, the Sheinbaum administration had raised the possibility of creating a mechanism to reimburse migrants for the tax collected, a measure that would have represented a considerable fiscal and logistical burden for the Mexican government.

However, once the details of the US law were defined—that the 1% tax would apply exclusively to cash transactions—the Mexican government significantly adjusted its strategy. The new policy no longer seeks to offset spending, but rather to effectively nullify its effect.

"Rather than reimbursing cash senders, [the goal is] to make it easier for everyone who sends cash to obtain their Financiera del Bienestar card," President Sheinbaum declared, outlining the new approach.

The central focus of the contingency plan is the massive promotion of the Finabien (Financial Well-being Card). The strategy consists of utilizing the Mexican consulate network in the United States to make it easier for Mexicans, especially those without bank accounts, to obtain this card.

By accessing the Finabien Card, migrants can send money electronically, which is completely exempt from the new US tax. This move has a double benefit:

• Protects migrants: Allows them to legally and safely evade the tax, preventing them from resorting to informal and risky channels.
• Modernize and formalize: Promote financial inclusion for the Mexican diaspora and formalize a capital flow that is vital to the national economy.

This pragmatic response is complemented by prior diplomatic work. The Mexican government confirmed that a delegation of senators and the ambassador in Washington held meetings with U.S. legislators to block the proposal. These efforts are considered key to achieving the tax rate reduction from the original 5% to the final 1%.

Mexico's strategy, therefore, has been multifaceted: diplomatic pressure to mitigate the damage and an innovative public policy solution to neutralize the remaining impact. By transforming a challenge imposed by a hostile foreign policy into an opportunity for the financial modernization of its diaspora, the Sheinbaum administration demonstrates a capacity for strategic maneuvering in the face of international pressure.