Mexico experiences a significant decline in remittances in June, marking the largest dropover the last ten years
In 2025, the expected impact of U.S. immigration policies on remittances and the Mexican economy is largely negative. Tightening restrictions have created legal insecurity for undocumented Mexican immigrants, leading to a decline in workforce participation and, consequently, a contraction in remittance flows.
Remittances, a significant source of income for Mexican households, have been on a steady growth trajectory, averaging 15% annual growth during 2020-2023. However, recent data show remittances contracting at about 2.7% year-over-year in early 2025. This decline coincides with Mexico’s economic growth projections lagging behind other Latin American countries and adds to domestic and external risks constraining the economy.
The U.S. introduced a new 1% tax on cash remittances by non-U.S. citizens, effective December 2025, as part of the "One Big Beautiful Bill." Although this tax is relatively low and covers only cash and check transfers, it could still discourage formal remittance flows and push migrants toward informal channels, complicating the financial pipeline to Mexico.
Increased funding directed at immigration enforcement, including stepped-up detention and deportation measures, has further restricted immigrant workers, limiting their ability to remit funds back home. Border apprehensions have fallen to their lowest level in years, indicating fewer new migrants entering the U.S. labor market, which may also contribute to lower remittances.
Analysts from Banorte, BBVA, Goldman Sachs, and JPMorgan predict a continued decline in remittances in the second half of 2025. The United States will impose a 1% tax on remittances sent in cash starting on Jan. 1, 2026. The decline in remittances could affect millions of Mexican families who depend on them to meet their basic needs.
In response, the Mexican government is promoting a government bank card to help Mexicans living in the United States avoid the tax. The majority of remittances to Mexico are sent from the United States. In June, $5.2 billion was sent to Mexico in remittances, coming in 12.7 million individual transfers. Between January and June, 99.1% of all remittances to Mexico were sent electronically.
Jesús Cervantes González, director of economic statistics at the Center for Latin American Monetary Studies, stated that there are indicators showing a weakening of employment for Mexican immigrant workers in the United States. The amount of money Mexico received in remittances fell 16.2% annually in June, marking the largest year-over-year decline for any month in more than a decade.
The decline in remittances could contribute to a lower level of growth in the Mexican economy in 2025. In the first half of 2025, remittances represented 3%-4% of Mexico's GDP. The number of transfers declined 14.3% compared to June 2024. Gabriela Siller, director of economic analysis at Banco Base, wrote on Friday morning that remittances plummeted in June, with the average individual remittance to Mexico in June being $409, a 2.2% annual decline.
U.S. Immigration and Customs Enforcement has carried out immigration raids in various U.S. cities this year, including in Los Angeles in June. The U.S. government is pursuing an aggressive deportation agenda, which further restricts the ability of Mexican immigrants to work and send remittances back home.
In conclusion, tighter U.S. immigration enforcement and legal barriers are expected to reduce the ability and willingness of Mexican immigrants to send remittances, exacerbating economic challenges for Mexico in 2025.
- The trends in politics, with tightened U.S. immigration policies, are projected to negatively impact remittances and the economic growth of Mexico.
- The decline in remittances, a significant source of income for Mexican households, is largely due to these politics, leading to a contraction in workforce participation and a decrease in income for millions of families.
- In the realm of business, a new 1% tax on cash remittances by non-U.S. citizens, effective in December 2025, could discourage formal remittance flows, pushing migrants toward informal channels and complicating the financial pipeline between the U.S. and Mexico.
- The news of increased funding for immigration enforcement, including stepped-up detention and deportation measures, is restricting immigrant workers' ability to remit funds back home, impacting both the economy and the lives of many Mexican families.
- The economy of Mexico is facing additional risks, as remittances, which represent 3%-4% of Mexico's GDP, are declining and predicted to continue doing so in the second half of 2025. This economic downturn may also have repercussions in the education-and-self-development sector, as families struggle to meet their basic needs.
- The current crime-and-justice situation, with ongoing immigrant raids and the aggressive deportation agenda, further emphasizes the need for a more welcoming environment for migrants, as it places lasting restrictions on the ability of Mexican immigrants to work and send remittances back home.
