What are the implications of the remittance tax proposed by Donald Trump? Remittances are money transfers sent by migrants from abroad to their home countries. In Mexico’s case, they represent one of the country’s most important economic pillars. In 2024, these transfers totaled 64.7 billion dollars, equivalent to 3.5% of the national GDP, according to the Ministry of Finance and Public Credit (SHCP). This money not only represents financial support for families but also serves as a stabilizing factor for the country’s macroeconomic balance and balance of payments.
According to a study published by BBVA Research, 97% of the remittances received by Mexico come from the United States, making it the top global sender of remittances. The dependency is evident: around 12.7 million Mexican migrants live in the United States, of which 4.5 million are citizens, 3.7 million have legal residency, and approximately 4.5 million are undocumented.
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What is Donald Trump proposing with the remittance tax?
In May 2025, Republican legislators in the U.S. House of Representatives introduced a legislative package titled “The One, Big, Beautiful Bill.” This proposal, backed by former president Donald Trump, includes the creation of a 5% tax on remittances sent by undocumented migrants from the U.S. to any foreign country.
The stated goal is to generate tax revenue to fund domestic programs. However, the measure excludes U.S. citizens, and possibly legal residents with a Social Security number, confirming that the direct target is undocumented migrants, many of whom are Mexican.
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What would be the economic impact of the remittance tax?
BBVA warns that imposing a 5% remittance tax would be “unfair, regressive, and contrary to international commitments.” The institution estimates that the cost of sending $350 from the U.S. to Mexico would rise from $6.00 to $23.50—almost four times more expensive.
This increase would distort the money transfer market and force migrants to find ways to avoid paying the tax. Among the options:
- Channel transfers through relatives or friends who are U.S. citizens.
- Use the banking system to send money directly.
- Turn to informal channels that may fall outside the regulated and secure framework.
Which states would be most affected by the remittance tax?
Although macroeconomic effects would be limited—impacting the balance of payments by just 0.08% of GDP—regional effects could be significant.
The states most affected in percentage terms would be:
- Tamaulipas: -4.4%
- Guerrero: -4.3%
- Puebla and Oaxaca: -3.6%
- Veracruz: -3.4%
In absolute terms, the states that would lose the most in millions of dollars would be:
- Michoacán: -147.5 million USD
- Guerrero: -146.6 million USD
- Oaxaca: -124.8 million USD
- Puebla: -122.8 million USD
- Guanajuato: -121.3 million USD
The estimate is based on the assumption that half of Mexico’s remittances are sent by undocumented migrants, which would imply a reduction of 1.563 billion dollars in 2026.
What impact would the tax have on Mexican migrants?
The human impact is the most severe. According to BBVA, around 4.1 million undocumented Mexican migrants would be directly affected by the tax. These migrants, who already pay between 10% and 37% of their income in federal taxes through the Internal Revenue Service (IRS), would face a form of double taxation by having to pay for sending money to their families.
“The remittance tax is regressive, as it affects undocumented migrants more, who tend to have lower incomes and fewer options for avoiding the tax,” the report states.
What is the Mexican government’s stance on the remittance tax?
President Claudia Sheinbaum Pardo firmly rejected the proposal backed by Donald Trump. In her morning press conference known as “Las mañaneras del pueblo,” she stated:
“We do not agree. First, it is discriminatory; and second, it violates a Treaty signed between Mexico and the United States.”
Sheinbaum noted that the measure contradicts the Treaty to Avoid Double Taxation, in force since 1994, whose Article 25 establishes that no national of one signatory country should be subject to heavier taxes than the nationals of the other.
She also announced a series of diplomatic actions:
- Meetings between Ambassador Esteban Moctezuma and U.S. congress members and migrant organizations.
- A Mexican Senate commission, with representation from all political parties, will open dialogue with U.S. lawmakers.
- A call to Mexican nationals in the U.S. to write letters to their representatives expressing their opposition.
“The tax would hurt those who have the least and would reduce the spending capacity of our migrants in the United States,” Sheinbaum added.
What alternatives could migrants use to avoid the tax?
BBVA’s study outlines several alternatives Mexican migrants could use to evade or mitigate the impact of the remittance tax:
- Banking inclusion: Currently, 85% of adult Mexican migrants have bank accounts. However, in Mexico, financial inclusion among remittance recipients remains low. This represents an opportunity to advance digital economic inclusion and reduce informality.
- Informal channels: The higher cost of sending money could revive practices such as using independent remittance agents or encourage sending gift cards or making online purchases from the U.S. with delivery in Mexico.
BBVA warns that such practices could, in a worst-case scenario, facilitate the involvement of criminal organizations in the remittance market.
Could Donald Trump’s remittance tax be illegal?
Yes. Finance Secretary Edgar Amador Zamora and Foreign Secretary Juan Ramón de la Fuente have stated that the tax violates the current bilateral treaty with the United States and could be legally challenged.
De la Fuente said that the Mexican government has already sent an official letter to the House Ways and Means Committee, signed by Ambassador Moctezuma and North America Unit Chief Roberto Velasco, explaining the reasons why the tax should not be implemented. One of the key points is that only 18% of migrants’ income is sent as remittances; the rest stays in the U.S. economy.
The BBVA report highlights that this type of measure goes against the United Nations Sustainable Development Goals (SDGs), particularly SDG 10, which promotes reducing inequalities and the cost of remittance transfers. Additionally, it contradicts principles upheld by international organizations such as the World Bank and IMF, which advocate for regulated, secure, and affordable migrant money flows.
What will happen to remittances in Mexico?
The debate over the remittance tax highlights the vulnerability of millions of Mexican families who rely on these money transfers. It also underscores the political use of migrants in electoral contexts, such as the one the U.S. is experiencing in 2025.
While the macroeconomic impact may seem marginal, the human and social cost would be enormous. Remittances in Mexico are not just money—they represent family bonds, opportunities, and survival. As BBVA puts it, “a remittance tax would be unfair, regressive, and have limited impact”, but above all, it would be a deep wound in the lives of millions of Mexicans both inside and outside the country.
