Beyond the Trump administration’s proposal to tax remittances at 5% of their value, which violates the Double Taxation Agreement between Mexico and the United States, the measure represents a potential hit of more than $3.3 billion to Mexico’s annual foreign exchange earnings. According to various official sources, remittances reached a historic high of $64.745 billion last year, exceeding the $54.43 billion from agro-industrial exports, the $32.956 billion from tourism, and the $28.426 billion from oil exports. Automotive industry exports reached $193.907 billion.
Section 112105 of the Republican budget proposal for 2026 states that all individuals who are not U.S. citizens must pay 5% of the value of the transfer, starting next January 1. Currently, only the state of Oklahoma charges five dollars per remittance for amounts under $500 and one percent for amounts over $500. The World Bank estimates that migrant workers send more than $660 billion each year from the United States, primarily to Mexico, China, India, the Philippines, and Guatemala.
So far, no representative has raised the issue of the remittance tax, either at Tuesday’s Ways and Means Committee meeting or at Friday’s Budget Committee meeting. Discussions have centered around cuts to Medicaid, a program that helps cover medical costs for the neediest and which was the reason for the failure of Friday’s meeting; the level of state and local tax deductions; and cuts to loans for green projects, student loans, and the food stamp program. The remittance tax is part of the long-standing chapter “Removal of Tax Benefits for Illegal Immigrants,” which was approved without comment by the Ways and Means Committee.
Although the Hispanic Caucus—a group of 38 representatives and four Democratic senators who lobby for the interests of the Hispanic community in Congress—has spoken out against the remittance tax, it is unknown how its members will vote because the budget initiative includes other issues that may have a greater impact on their constituents. Representative Verónica Escobar (D-Texas) is the only member of the Hispanic Caucus who serves on the House Budget Committee and who may have been interested in bringing the issue up for discussion at the committee meeting Sunday night. Once the Budget Committee approves the initiative, it will move to the House Rules Committee, where Teresa Leger Fernández (D-New Mexico), the only member of that committee’s Hispanic Caucus, is likely to be interested in discussing the issue.
If the Mexican government intends to lobby against the remittance tax in the House of Representatives, it will have to do so in person this week, as Speaker Mike Johnson wants the initiative to be voted on this Friday before sending it to the Senate, where several issues will need to be reconciled and, under an optimistic scenario, the final version approved for Trump’s signature on July 4. If the House of Representatives approves the remittance tax, the remaining options will be in the Senate Finance and Budget Committees, both chaired by pro-Trump Republicans (Mike Crapo and Lindsey Graham), where the Mexican position could be echoed if presented as a joint proposal by the affected countries.
However, the question is: what would be the political cost of eliminating the tariffs? After 15 years of virtually no presence on Capitol Hill, who would be the spokesperson? If the Sheinbaum administration’s requests aren’t heeded by legislators, the only alternative is to talk to Trump. So far, everything the US president has asked of Mexico has been done, and without any retaliation for the tariffs. What more could he ask for?
For its part, this situation shows the enormous importance of building a platform in Washington of pro-Mexico legislators, especially Republicans, who will be key to passing the new USMCA and initiating a rapprochement that benefits everyone.
Source: elfinanciero
