Remittances, at risk!

Remittances are at risk!

The 3.5% tax that President Donald Trump intends to impose on them and the migrant raids he is carrying out in some US cities could reduce the flow of this powerful stream of foreign currency, which has been growing and breaking records practically every year.

The tax and the raids pose a serious threat to the remittances of resources from Mexicans working in the United States to their families in Mexico.

If the tax on remittances is approved and the aggressive raids and subsequent protests continue, the impact of the decrease in remittances arriving in Mexico will translate into a blow to the national economy and the economies of millions of Mexicans who receive them.

At the end of last year, 2024, remittances reached a total of $64.745 billion.

This is a record figure equivalent to 3.5% of the National Gross Domestic Product.

Remittances are the second largest source of foreign currency entering the country.

Among Mexico's main sources of foreign currency, auto parts exports rank first, with a total of $106 billion.

The auto parts industry is the main source of foreign currency and represents 17.2% of Mexico's total exports.

Remittances rank second, with $64.7 billion, ahead of light and heavy vehicle exports, which generated $60 billion in 2024.

Remittances are received by around 10 million people in Mexico.

Around 4.5 million homes benefit from its reception.

And depending on the region, entity, or locality, remittances represent different levels of spending for the individuals and families who receive them.

In some places they represent up to 41.7% of their spending.

Therefore, the decline in remittances could represent a severe blow to the national economy.

And it would undoubtedly have a negative impact on reducing poverty among large sectors of the national population.

Remittances and social programs provide relief from the precarious economic conditions faced by millions of Mexicans.

During the presentation of the Financial Stability Report, Banxico Governor Victoria Rodríguez Ceja warned about the risks of a potential tax on remittances from the United States.

The central bank itself, in its report, highlights that a reduction or slower growth in remittances could affect the Mexican financial system, especially in the regions that depend most on these revenues.

He explains that fewer remittances increase delinquency, with a more significant impact on the personal credit, consumer durables, and microcredit segments, which are precisely where borrowers are most vulnerable and tend to rely more on these resources.

The concern about the decline in remittance flow is valid because, in practice, the reduction is already being recorded.

In the first four months of 2025, remittance flows fell by 2.5 percent.

Even more worrying, last April, the flow of remittances fell by 12.1 percent.

It was just the month before the initial proposal for a 5% tax on remittances was introduced in the House of Representatives.

On May 12, 2025, the U.S. House Ways and Means Committee introduced a tax bill, part of the legislative package known as “The One, Big, Beautiful Bill,” promoted by President Donald Trump.

This included a 5% tax on remittances sent from the U.S. abroad, targeting migrants without citizenship or permanent residency, with the goal of discouraging illegal migration and funding measures such as border security.

On May 22, 2025, the House of Representatives approved reducing it to 3.5%, following pressure from financial services and Mexican diplomatic efforts.

It still needs approval in the U.S. Senate, where Senator Schmitt introduced a proposal to increase the tax to 15%, although it has not been approved.

The immigration issue has been and continues to be one of the most important issues on President Donald Trump's agenda. The crisis caused by the US's migrant persecution policy is escalating, and it is unknown how far it will go.

The Mexican president has been cautious but emphatic in defending migrants' rights.

Defending remittances ultimately means defending the income of millions of Mexicans. Time.