Trump targets unlawful migration with remittance tax plan – DW – 05/23/2025 | EUROtoday

Mexico’s President Claudia Sheinbaum selected a symbolic stage for capturing again at US President Donald Trump’s proposal for taxing remittances, referred to as “remesas” in Spanish-speaking Latin America.

During the development ceremony for the Los Cabos Regional General Hospital in Baja California Sur on Sunday (May 18), she underlined that the US “can’t tax people twice when they’re already paying taxes.”

By selecting this setting, Sheinbaum visually strengthened the social and political dimension of the US regulation, which is inflicting widespread concern throughout your complete area.

Republican lawmakers have included the plan for a 5% tax on remittance transfers in Donald Trump’s so-called One, Big, Beautiful Billa sweeping multi-trillion-dollar piece of laws geared toward advancing Trump’s agenda on taxes, migration, vitality, protection and the nationwide debt.

Bill targets $160 billion in annual transfers

According to the annual report from the Migration Department of the Inter-American Development Bank, remittances from the US to Latin America and the Caribbean reached $160.9 billion (€142.53 billion) in 2024 — a rise of $7.7 billion over the earlier yr.

The largest recipients have been Mexico ($64.7 billion) and Guatemala ($21.5 billion). Transfers to Mexico alone common about $177 million per day.

Jesus Alejandro Cervantes Gonzalez from the Center for Latin American Monetary Studies (CEMLA) in Mexico City has damaged down the 2024 figures in an interview with DW. He mentioned remittances make up “20% of GDP in Guatemala, 27% in Nicaragua, 26% in Honduras, 24% in El Salvador, 20% in Haiti, and 19% in Jamaica.”

The financial and social significance of those funds for the receiving international locations is immense, he mentioned, as they “alleviate financial constraints for millions of households and reduce poverty.”

“They enable a higher standard of living and help fund spending on consumer goods, education, health, housing, and sometimes investments in small family businesses,” he mentioned.

According to CEMLA, which specializes within the economics of remittances, about 4.5 million households and 9.8 million adults in Mexico obtain such transfers from the US, with poorer rural areas benefiting probably the most.

Taxation and id checks purpose at curbing unlawful migration

According to main Spanish financial and monetary information portal The economistbased mostly in Madrid, Florida Governor Ron DeSantis is reportedly contemplating requiring id verification for cash transfers, that means senders must show they’re legally employed within the US.

The measure, supposed to dam remittances from undocumented migrants, has been criticized by Mexican Senator Antonino Morales from the ruling Morena celebration as “blatantly discriminatory and racist.”

Morales additionally mentioned past the remittance tax, undocumented migrants may additionally “lose access to [health care] programs like Obamacare and Medicare.”

Risk of diverted remittance flows

“In principle, the tax would only apply to immigrants who are not US citizens. That includes undocumented migrants as well as those who are legally residing in the country,” CEMLA professional Gonzalez advised DW.

If carried out in 2026 as proposed, the remittance tax may considerably cut back the movement of cash from the US to Latin America and the Caribbean.

For international locations equivalent to Mexico, Guatemala, Honduras, El Salvador, and Nicaragua —the place remittances account for a excessive share of GDP — the impression can be particularly extreme.

Gonzales says that these international locations would face a double blow because the tax can be imposed “in addition to ongoing deportations of undocumented immigrants,” and comes at a time when there are “signs that employment among Latin American immigrants in the US is declining.”

He additionally warns of unintended penalties. “The remittance tax could push transfers into informal channels — through couriers or digital cryptocurrency transactions,” which may increase the chance of black market exercise.

Trump’s Republicans danger alienating Latino voters

But the backlash might already be taking form. Harsh photos of Latin American migrants being arrested within the US and the regular stream of unfavourable information affecting Hispanic Americans have intensified strain on Republican politicians forward of the November 2026 midterm elections. These elections will resolve all seats within the House of Representatives and one-third of the Senate.

In the 2024 presidential election, a major variety of Latinos voted for Republicans and Donald Trump — greater than within the earlier 2020 election. But some Latino voters, significantly in Republican strongholds like Florida, now really feel betrayed by the celebration.

President Sheinbaum has explicitly referred to as on Mexican Americans to voice their issues to native US politicians. The Republican-controlled House of Representatives on Thursday handed the tax reduce and spending invoice by a slim margin. The invoice will now transfer to the Senate for a vote earlier than President Trump can signal it into regulation.

This article was initially written in German.