What to Do After Trump’s Tax on Remittances? Millions of Latin American Families Affected

On July 4, Trump’s remittance tax was approved, adding a 1% fee to cash transfers sent abroad.

It will affect millions of immigrants who send money to their families in Latin America.

Now it’s crucial to choose cheaper and safer ways to send money so you don’t lose as much.

Trump’s new 1% remittance tax on cash transfers sent abroad aims to raise billions of dollars, but directly cuts into the money immigrants send to their families in Latin America.

Even though it sounds low, the fee is added to already high commissions, forcing many people to rethink how to send money in a cheaper and safer way.

Trump’s Remittance Tax: How Will It Be Applied?

This measure is part of the immigration plan promoted by President Trump.

Although earlier versions included higher rates aimed at undocumented immigrants, the current version imposes a 1% tax on any cash transfer, money order, or cashier’s check sent abroad, regardless of citizenship or immigration status.

Each year, tens of billions of dollars leave the U.S. in remittances, according to the Center for Global Development:

Mexico is the main recipient and stands to lose more than $1.5 billion annually.

Countries like Guatemala, the Dominican Republic, and El Salvador depend heavily on this money, with remittances sometimes representing over 20% of their GDP.

It’s estimated that the tax on remittances will impact about 23 million permanent residents, 14 million visa holders, and 12 million undocumented migrants — in what is the first federal measure of its kind in the U.S.

How Trump’s Remittance Tax Affects Your Wallet

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If you send cash home, you’ll pay more. On top of the current costs — about 6% on average in fees through Western Union or MoneyGram — this new 1% is added, leaving less money for your family.

For millions of Latino families in the U.S., remittances are a crucial monthly commitment. Even an extra 1% tax on remittances could force people to send less money or look for cheaper alternatives, although not everyone has easy access to other options.

Legal Alternatives to Reduce the Impact of the Remittance Tax

PHOTO: Canva

Use electronic transfers: These are not subject to the new 1% tax. According to analysis from the Migration Policy Institute and specialized reports, bank or digital transfers are exempt because the tax only applies to cash, money orders, and cashier’s checks (source).

Money transfer apps: Platforms like Remitly, Xoom, or Wise often offer better exchange rates and lower fees.

International bank deposits: If your relatives have accounts that accept international deposits, you could send money without paying the cash surcharge.

Choosing the right option can help you send more money home and minimize the impact of the new tax.

Opinions from Experts

Ariel Ruiz Soto, an analyst at the Migration Policy Institute, warned on FOX:

“Even a 1% tax could significantly impact the development of countries like Honduras, El Salvador, and Guatemala.”

The Center for Global Development highlighted:

“The impact of this remittance tax will far exceed the effect of cuts in foreign aid.”

What to Expect After the Tax Takes Effect

A 1.6% drop is projected in the total volume of remittances sent from the US because of this tax. Many migrants will consider electronic or digital options to avoid the tax, but not everyone has access to bank accounts or reliable apps.

Meanwhile, Latin American governments are preparing for the impact.

Lower household income means less domestic spending, more pressure on local currencies, and a greater risk of increased migration due to economic crises. Mexico, Guatemala, and El Salvador are already closely monitoring these possible consequences.