Is United States President Donald Trump’s mass deportation agenda making Mexican immigrants in the U.S. scared to go out to send money home? Bank of Mexico (Banxico) data suggests it is.
Remittances sent to Mexico plummeted 12.1% annually in April, the largest year-over-year decline for any month since 2012.
Banxico reported on Monday that remittances totaled US $4.76 billion in April, down from $5.41 billion in the same month a year earlier. The 12.1% annual decline was the biggest year-over-year drop since September 2012.
In a post to X, Gabriela Siller, director of economic analysis at Banco Base, said that the decline was due to the “deterioration of the labor market in the United States and migrants’ fear of being deported,” which leads to them “avoid going out to work and/or send remittances.”
Alberto Ramos, head of Latin America economics at Goldman Sachs, also linked the decline in remittances to a hardening of immigration policies in the United States. For its part, analysts at the bank BBVA hypothesized that a weakening of the dollar against the peso in April led to a decline in remittances. Another possible contributor to the decline was that Easter fell in April this year, whereas it was in March in 2024.
The vast majority of remittances sent to Mexico come from the United States, where millions of Mexicans — both documented and undocumented — live and work. Mexico is the world’s second largest recipient of remittances after India.
The slump in remittances in April came after a year-over-year increase of 2.5% in March and a decline of 0.8% in February. Mexico received a record-high $64.74 billion in remittances in 2024, the 11th consecutive year of growth in such transfers.
The decline in April caused the total remittances sent to Mexico in the first four months of the year to fall 2.5% annually to $19.01 billion, Banxico reported. Trump was in power for the majority of this period, having commenced his second term on Jan. 20.
During his 2024 presidential election campaign, Trump stated that he planned to carry out “the largest deportation operation in American history” if elected to a second term. More than four months into the second Trump administration, the number of deportations has not yet matched the pre-election rhetoric of the U.S. president.
However, U.S. Immigration and Customs Enforcement has increased deportation raids across the United States and there is evidently fear that Trump’s deportation mission will ramp up even further. Adding to that concern, Homeland Security Secretary Kristi Noem reiterated on Sunday that the U.S. government is “going to do mass deportations.”
The publication of the latest Banxico data on remittances came after the United States House of Representatives passed legislation on May 22 that would impose a 3.5% remittance tax on funds sent abroad by individuals who are not U.S. citizens.
The Mexican government is vehemently opposed to the proposed measure, which will become law if approved by the U.S. Senate.
Mexican bank Banorte said in a note that if the tax is approved, “an increase in flows” of remittances to Mexico would likely occur “before it goes into effect.”
The longer-term impact of a remittances tax in the U.S. is “still very uncertain,” Banorte said.
The number of remittances and their average value declined in April
Banxico reported that almost 12.4 million individual remittances were sent to Mexico in April. The average value of each of those transfers was $385.
The total number of remittances was 8.1% lower than a year earlier, while the average value of a single transfer fell 4.4%.
When converted to pesos, remittances actually increased
There was some good news for Mexico with regard to the latest data on remittances: their peso-value increased in April in annual terms thanks to a more favorable exchange rate, as the peso was much weaker against the US dollar in April than in the same month of 2024, when the Mexican currency reached an almost-nine-year high against the greenback.
Once inflation was also taken into account, the real annual increase in remittances in peso terms was 5.5% in April, according to the newspaper El Economista.
That’s welcome news for the significant number of Mexican families that depend on remittances to meet their basic needs.
The monetary transfers have represented 3%-4% of Mexico’s GDP in recent years.
According to the Center for Strategic and International Studies, a Washington D.C.-based think tank, remittances “form the largest single source of foreign income for Mexico, outstripping the income brought in by any other individual source, including foreign direct investment (FDI) from the United States, tourism, and net manufacturing exports.”
With reports from El Economista, El Financiero, Reforma and Reuters
