MEXICO CITY (CN) - For Mexico, like many other Latin American nations, the earnings of its citizens working in the United States are a pillar of the national economy.
Remittances from Mexicans in the U.S., although not formally counted as part of the GDP, represent approximately 3.5% of the country's circulating money and provide essential financial support to around 12 million families.
That dynamic has weakened in recent months, however, largely due to President Donald Trump's renewed crackdown on immigration and the ripple effects that followed on both sides of the border. But there are domestic reasons for the drop too, experts said.
A recent report by Banxico, Mexico's central bank, revealed that remittance income between January and September of this year fell by 5.5% compared to the same period in 2024. It marks the steepest decline since 2013, a trend that has triggered concern south of the border as Trump's policies show no sign of easing.
Sofia Ramirez Aguilar, director of the local consultancy "Mexico, como vamos?", counted several factors for the drop.
"The first one is the ageing or death of Mexicans in the U.S., which cuts those economic ties to their relatives in Mexico," she said. "And then there's the increasing fear of undocumented migrants in the U.S., which bars them from showing up to work or even having a more 'public' economic life."
But there is a third and often overlooked reason, Ramirez Aguilar said, also tied to recent U.S. immigration policies. Many of the remittances sent from the U.S. to Mexico had been coming from migrants of other nationalities - Venezuelan, Central American and others - who received money from relatives up north to fund their journeys through Mexico. As many of those migrants have now either abandoned their attempts to cross the border or settled temporarily on Mexican soil, those transfers are no longer being sent as regularly as before.
Remittances from California, the largest source of funds from the U.S., dropped by 9% between January and September, while Texas, the second-largest sender, recorded a 3% decline. Colorado, previously third among U.S. states in volume, has now fallen to eighth place after a striking 36% drop.
Still, remittances remain one of Mexico's most stable and vital inflows of foreign income. Migrant communities, along with businesses facilitating these transactions, continue to look for ways to overcome growing regulatory and logistical hurdles.
The bright red facade of OXXO convenience stores has become a near-constant presence in Mexico City, often with two or more per block. Inside, the ubiquitous chain is far more than a spot to grab a snack; it serves as a financial hub and daily lifeline for millions of Mexicans, both in sprawling urban centers and remote rural towns.
At the counter, customers line up to recite endless card numbers, PINs and confirmation codes, completing deposits, bill payments, cellphone recharges and cash withdrawals.
In a downtown Mexico City location, store attendant Diana Bernal said that receiving remittances through OXXO - which began a partnership with Western Union in 2016 - has become routine.
"You need the 10-digit Western Union transfer number and a government ID. We check the amount, confirm the code, and that's it," she explained from behind the counter. "I'd say at least 10 to 15 people come in every day to pick up money from the U.S."
Ignacio Martinez, a professor at the Mexican National Autonomous University, said the drops also have to do with currency flows and the exchange rate, which fell from 20.90 to 18.73 Mexican pesos to the dollar from January.
"A migrant who used to send $500 to their families, which used to be over 10,000 Mexican pesos, is now sending the same amount to be exchanged for 9,500," Martinez said. "They're 'losing' 700 pesos."
Martinez said the drop in income is a domestic monetary policy issue. "Inflation, exchange rates and overall economic policies are more relevant to this discussion than the Trump policies," he said.
In Mexico, aside from OXXO, major retail destinations for remittance collection beyond traditional banks include Walmart, the grocery chain Soriana, Elektra and Coppel, which operates its own bank, BanCoppel. Both Elektra and Coppel have responded to the 1% remittance tax approved by the U.S. Congress in July - part of the so-called "One Big Beautiful Bill" Act, set to take effect in January - by promoting their existing "remittance in kind" programs more heavily.
Under these initiatives, senders in the U.S. can purchase household goods or appliances in dollars and have them delivered directly to relatives in Mexico. Because the transaction is classified as a purchase rather than a cash transfer, the new tax will not apply.
Digital wallet platforms, such as OXXO's SPIN card, will also be exempt from the levy, allowing users to continue sending and receiving funds electronically without the additional cost.
As long as these "camouflage systems" remain in place, Ramirez Aguilar said, "taxes won't necessarily affect remittances."
Courthouse News correspondent William Savinar reports from Mexico City. Courthouse News correspondent Lucia Cholakian Herrera is based in Buenos Aires, Argentina.
Source: Courthouse News Service
