Mexico faces economic instability as remittances from US plunge 12%

Remittances sent to Mexico slumped 12.1% in April compared to a year earlier, according to central bank data published on Monday, marking the steepest drop in over a decade as U.S. lawmakers mull a tax on such payments sent abroad.

The world’s second-largest recipient of remittances, Mexico receives these payments chiefly from migrants working in the neighboring United States. In April, Mexicans abroad sent fewer transactions and smaller payments, totaling $4.76 billion.

Analysts said the slump likely resulted from a broad crackdown on migration in the U.S. since President Donald Trump came to power in January, as authorities revoke some Biden-era protections and increase raids across the country.

The latest data marks the steepest year-on-year drop since September 2012, according to central bank data.

Banco Base economic analysis director Gabriela Siller said April’s drop was likely due to a weaker U.S. job market and migrants’ fear of losing their jobs or being deported.

“The April remittance data is terrible,” she said in a post on X, attributing the drop to “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.”

Some 12.3 million Mexicans live abroad and 97% of them live in the United States, according to estimates last year from BBVA Research, which said 2024 marked Mexican remittances’ 11th straight year of growth.

The central bank said April, however, saw 8.1% fewer transactions than a year earlier - down to 12.4 million - while payment amounts were down 4.4% to average $385.

U.S. senators are evaluating a bill that includes a proposed 3.5% tax on remittances. Analysts at Banorte predicted short-term disruptions if the measure is passed.

“If approved, we anticipate an increase in flows before it goes into effect, with the effect after that still very uncertain,” Banorte said in a note.

Mexican officials have argued that taxing remittances could violate the countries’ treaty to avoid double taxation, as migrants’ income is already subject to local taxes.

In 2024, Mexicans living abroad sent a record $64.75 billion home in remittances - largely from Texas and California to states in central and western Mexico.

Through the first four months of 2025, the central bank recorded remittances of $19.02 billion, down 2.5% from last year.