Trump’s remittance tax won’t make any money

It will be a bonanza for the cartels though.

In 2023, a Mexican non-profit noted that remittances from Minnesota had grown exponentially virtually overnight. Gradual growth made sense in states with large Mexican communities, like California or Texas. Minnesota was not one of these. They knew back then that something was definitely off.

Fast forward to 2025, and one piece of US legislation could make the emerging problem this non-profit uncovered far worse…

Remittances to riches

The Mexican government’s charm offensive on remittances is misled. Diplomats and spokespeople insist that migrants are good because the vast amount of money they make in the US stays in the US—about 84% of it.

But the sense within the Trump administration is that any amount of money leaving the country is money that should have been spent in the US by US citizens. Just in 2024, $64.75 billion dollars were sent to Mexico—about 4.5% of its GDP. Since over 95% of it comes from the US, the Republicans think they can cash in.

So, this week, they did just that and proposed a 5% tax on remittances sent abroad by non-citizens. It will generate, they claim, an additional billion dollars for the US Treasury; three billion in the next decade.

Beyond the money, the Trump administration has greater designs for this bill. A few months back, now-treasury secretary Scott Bessent said he was working on “a plan for ‘financial deportation,’ that could restrict the flow of funds in terms of remittances.” His suggestion being that the government would make staying in the US financially untenable for migrants.

None of this—neither the extra billion dollars nor the ‘financial deportation’—will work. In fact, the plan is likely to backfire spectacularly, resulting in little tax collection and the creation of a new source of revenue for transnational criminal organisations.