In April 2025, remittances to Mexico fell 12.14% year-on-year to $4.761 billion, their steepest decline since September 2012. Deteriorating U.S. job conditions, fear of deportation, and a proposed 3.5% remittance tax threaten families reliant on these funds.
In April 2025, remittances sent by Mexican migrants fell sharply by 12.14% compared to the same month in 2024, totaling $4.761 billion. According to Banco de México (Banxico), this marks the steepest year-on-year decline since September 2012, when the global economy was still reeling from the financial crisis. The drop follows a high of $5.1 billion in March 2025, underscoring a rapid reversal in one of Mexico’s most important sources of foreign income.
While remittances from the United States were already expected to waver, the 12.14% plunge amounts to a warning sign for thousands of households in Mexico that rely on these transfers for everyday expenses. During the first four months of 2025, cumulative remittance inflows reached $19.02 billion—a 2.5% year-on-year decline—compared to $19.52 billion in January-April 2024. This compares unfavorably to the record $64.75 billion sent home in 2024, which represented roughly 3.5% of Mexico’s GDP.
Banxico data shows both fewer transactions and smaller payment sizes drove the collapse. In April, the central bank recorded 12.4 million remittance transactions, an 8.1% drop from the 13.5 million processed in April 2024—the lowest transaction volume since October 2009. At the same time, the average remittance amount slipped by 4.4%, from $403 in April 2024 to $385 in April 2025. Lower transaction counts and shrinking remittance sizes reflect a U.S. labor market under strain and growing fear among migrants of enforcement actions and deportations.
U.S. Labor Market Weakness and Deportation Fears
Economic analysts tie the decline to two main factors: a weakening U.S. job market for lower-wage workers and an environment of heightened immigration enforcement. Gabriela Siller, director of economic analysis at Grupo Base, notes that many migrants prefer to save money or reduce trips to the workplace rather than risk potential detention or deportation. “April’s remittance data is terrible. Migrants fear going out to work simply to send money home,” she posted on social media, attributing the drop to both labor market deterioration and enforcement fears under U.S. policies.
Since President Donald Trump took office, the administration intensified raids on workplaces and revoked some protections that had shielded certain migrant workers. Even before the 2024 U.S. elections, anti-immigrant rhetoric escalated, prompting many undocumented migrants to stay off the radar. As a result, fewer migrants send funds back to their families, who then face lower purchasing power amid rising costs in Mexico.
Impact on Mexican Households and Local Economies
Remittance flows play a direct role in household budgets across Mexico’s interior states. In areas like Michoacán, Jalisco, and Guanajuato—regions with long histories of U.S. migration—families often rely on remittances for daily consumption, healthcare, education, and small business investments. Economists warn that a sustained drop will dampen local spending, slow down home improvements, stifle entrepreneurship, and affect school enrollment. These funds help bridge the gap for many rural and semi-urban households where local wages are low.
As purchasing power erodes, the Mexican peso’s exchange rate compounds the effects. In April 2025, the peso depreciated against the dollar compared to April 2024, making each remittance stretch further in theory—but falling average remittance sizes offset that benefit. Inflation in Mexico hovered around 3.5% during the first quarter of 2025, narrowing margins for families to allocate money toward non-essentials.
Proposed 3.5% U.S. Remittance Tax and Political Discourse
Further complicating the outlook is a proposal in the U.S. Congress to impose a 3.5% tax on remittances sent abroad. If enacted, critics argue it would cut into already strained flows and breach bilateral tax treaties designed to prevent double taxation. During congressional hearings, Mexican officials have warned that such a tax could undermine the economic stability of recipient families and possibly push migrants toward informal channels—which often charge higher fees and expose senders to exploitation.
In Mexico City, social advocates for migrant rights say that adding a remittance tax during a downturn would be “unfair and regressive” because Mexican-born migrants already face higher barriers to economic mobility in the United States. A BBVA Research report highlights that a 5% remittance tax—used as a proxy for similar legislative efforts—would raise sending costs on a $350 transfer from about $6 to $23.50, forcing many migrants to seek less secure informal routes or rely on relatives with legal status.
Electronic Transfers Maintain Dominance
Despite declining volumes, electronic transfers remain the dominant channel for sending money—accounting for 99% of all remittances in April 2025. Cash remittances and in-kind transfers represented just 0.8%, with money orders at 0.2%. This trend underscores the growing financial inclusion among migrants who prefer digital transfers for speed, security, and lower cost. Banxico’s data indicates that digital platforms and mobile banking solutions have largely replaced traditional cash couriers.
Economists forecast that the current slump in remittances will prove temporary once U.S. economic growth picks up and enforcement actions moderate. Historically, remittance flows rebounded quickly after downturns, as seen following the 2009 crisis. In 2024, remittances grew by 2.3%, reaching record highs despite global headwinds. As such, analysts expect a gradual stabilization in later 2025, provided no new anti-immigrant measures emerge and the proposed remittance tax fails to pass.
Banxico’s next monetary policy meeting, scheduled for late June 2025, will consider the impact of lower remittance inflows on domestic consumption and overall economic growth. Policy makers will weigh the effects of tighter U.S. policies alongside local inflation trends. Even with lower inflows, remittances are likely to remain a crucial buffer for thousands of Mexican families.
Mexico’s economic planners are closely monitoring the situation, urging bilateral cooperation to ensure that remittances continue to flow smoothly. For now, families in states dependent on these funds face tighter budgets, postponed investments, and greater uncertainty—reminding policymakers of the human dimension behind dry statistics.
