President Sheinbaum calls the new 3.5% remittance tax “absolutely unjust,” pledges diplomatic and WTO action to block the levy on funds sent home.
On May 23, President Claudia Sheinbaum unleashed a fierce rebuke of the U.S. House of Representatives after it voted to lower a planned tax on money sent home by immigrant workers from 5% to 3.5%. She called any levy on remittances “absolutely unjust,” warned it would violate bilateral treaties against double taxation, and threatened to challenge the measure at the World Trade Organization.
Mexico depends on remittances as an economic lifeline. In 2024, Mexicans abroad sent more than $60 billion back home, supporting education, healthcare and daily living for millions of families. A tax—even at 3.5%—would siphon billions from these households and deepen inequality in rural and low-income communities.
On May 22, the U.S. House passed a sweeping budget and tax package that included the remittance tax provision. Lawmakers trimmed the proposed rate from an initial 5% down to 3.5% as part of concessions to immigrant communities and allied Democrats. The measure now moves to the U.S. Senate, where party leaders aim to secure final approval before the July 4 recess.
Sheinbaum vowed to marshal a full diplomatic offensive. In her May 23 “mañanera” press conference, she announced that Mexico would dispatch a new envoy to Washington next week to lobby U.S. senators, build alliances with civil society groups and urge immigrant associations to press their representatives.
The president argued that the remittance tax breaches existing treaties that ban double taxation between Mexico and the United States. Under those agreements, Mexico has long insisted that income earned by its nationals abroad—and taxed in the host country—cannot face an additional levy when sent home. “This tax discriminates against Mexican families,” Sheinbaum said, noting that any breach opens the door for Mexico to file a dispute at the WTO.
Foreign Affairs Minister Juan Ramón de la Fuente echoed that view, stressing that Mexico will explore every legal avenue to block the measure. The Ministry of Finance has also begun mapping scenarios for retaliatory tariffs if the U.S. pursues the tax.
Remittances represented roughly 3.5% of Mexico’s GDP in 2024, second only to oil exports in foreign-exchange earnings. Economists at the Bank of Mexico project that a 3.5% tax could remove as much as $2 billion annually from local economies—funds often used for schooling, healthcare and small-business investment in the countryside.
Analysts warn that rural states such as Oaxaca, Michoacán and Guerrero, which rely heavily on senders in California, Texas and Illinois, would feel the greatest pain. A drop in remittance flows could force families into debt or prompt return migration as workers chase higher wages to offset the tax bite.
Mexico’s ambassador to the U.S., Esteban Moctezuma, held a phone briefing on May 22 celebrating the rate cut from 5% to 3.5% but immediately underscored that Mexico would keep fighting for full repeal. He credited letters, petitions and social-media campaigns by Mexican-Americans with helping secure the reduction.
Grassroots groups have mobilized on both sides of the border. In Los Angeles, the Mexican consulate hosted workshops on how to contact lawmakers; in Mexico City, migrant-rights organizations held a candlelight vigil outside the U.S. embassy.
Mexico’s government aims to engage U.S. senators before they debate the bill in early June. President Sheinbaum plans a call with Senate leadership, while Ebrard’s economic team readies simulation data on remittance impacts for congressional hearings.
On the Mexican side, legislators summoned the U.S. ambassador to testify before a Senate committee on “economic coercion.” Opposition parties have pinned the issue on national sovereignty, warning that a tax precedent against remittances could invite further levies on Mexican exports.
Sheinbaum underscored cross-party unity at home. Congress passed a nonbinding resolution on May 20 condemning any remittance tax as “discriminatory” and urging the executive branch to use all diplomatic tools. Some critics, however, caution that a hardline stance risks collateral damage in U.S. trade negotiations over steel, aluminum and automobiles—areas where Mexico faces 25% tariffs under the USMCA if it breaches pact rules.
As the U.S. Senate gears up for debate, Mexico’s leaders are racing to preserve a financial lifeline for millions. If the House-approved tax clears the Senate, Sheinbaum’s government has signaled it will take the fight to the WTO while exploring retaliatory economic measures. For now, the battle over a 3.5% levy spotlights the growing political clout of Mexican migrants and their vital role in both economies.