Mexico Sees Steepest Drop in Remittances in Over a Decade Amid U.S. Immigration Crackdown and Tax Threats

Mexico recorded a 12.1% year-on-year drop in remittances in April 2025, marking the steepest decline since in almost 13 years, according to new data released by Mexico's central bank. Total remittances fell to $4.76 billion, driven by both a decrease in the number of transactions and lower average amounts sent.

The drop coincides with heightened immigration enforcement in the United States and growing concern over a proposed 3.5% federal tax on money transfers sent abroad.

"The deterioration of the labor market in the U.S. and U.S. migrants' fear of going out to work and sending their remittances, for fear of being deported," explained Gabriela Siller, Director of Economic Analysis at Banco Base as quoted by Reuters.

Through the first four months of 2025, total remittances to Mexico reached $19.02 billion, down 2.5% from the same period in 2024. This marks a reversal after 11 consecutive years of growth, as previously reported last week by BBVA Research.

The proposed remittance tax—currently under discussion in the U.S. Senate—has prompted forecasts of further disruption. According to Banorte analysts, "if approved, we anticipate an increase in flows before it goes into effect, with the effect after that still very uncertain."

An analysis published last week by the Center for Global Development (CGD) estimates that the 3.5% tax could reduce remittance flows by approximately 5.6%, based on the established relationship between transfer costs and remittance behavior. Mexico is projected to lose over $2.6 billion annually as a result of the tax.

The CGD report also notes that such a measure may encourage a shift toward informal and unregulated channels, which are more difficult to monitor and may be subject to abuse. This risk is echoed by BBVA Research, which warned that the tax would increase the cost of sending a $350 remittance from about $5 to $17.25—an increase of nearly 250%—undermining a competitive market built over decades.

"The tax could disrupt a remittance system that is today secure, regulated, and highly competitive," BBVA said. With roughly 12.3 million Mexicans living abroad—97% of them in the United States—the implications of U.S. remittance policy remain a critical issue for millions of households in Mexico.