Fear of deportation is reshaping migrant behavior in the United States, where undocumented workers are scrambling to wire home as much money as they can—before they’re potentially forced to leave. The result: a remittance surge across Latin America that’s funneling billions of dollars from the U.S. into some of the region’s most fragile economies.
“I’ve been sending more money back home because you never really know what could happen,” Kevin M., an undocumented Ecuadorian restaurant worker in Manhattan, told Newsweek. “I still have a few debts to pay in Ecuador, and I don’t want to fall behind.”
Since President Donald Trump returned to office in January, the administration says it has removed 2 million people, 400,000 of whom were deported. ICE raids have swept across cities, farms, restaurants, churches, schools and even hospitals—places once considered off-limits. The newly flush agency has offered sign-up bonuses for immigration officers, ramped up workplace raids and cast a broad net across cities with high migrant populations. For many migrants, a sense of fear has been coupled with a new financial motivation.
Remittances from the United States to Latin America are now on pace to hit $161 billion this year, an 8 percent jump from 2024, according to the fintech outlet PYMNTS. The spike is being driven by countries like Honduras, Guatemala, El Salvador and Haiti, where money sent from abroad is often the largest single source of household income. Honduras leads the pack with a 25 percent increase in remittances in the first eight months of 2025 alone.
“There is definitely a family decision on the side of migrants to send as much as they can now,” said Manuel Orozco, director of the migration, remittances and development program at the Inter-American Dialogue in Washington, D.C. “They won’t be able to continue sending money once they return to their homeland.”
Cashing Out
The numbers are stark, and may have already hit a ceiling. Orozco said the average remittance sent from the U.S. has climbed from around $300 to nearly $400. “It’s unlikely to continue in 2026 because the average that migrants are sending is exceeding their income limitations,” he said. And a decline could be economically devastating for those countries: just a 5 percent drop in remittances would reduce Guatemala’s GDP by a full percentage point, Orozco told Newsweek.
Some migrants are sending lump sums now, bundling multiple transfers into larger one-time wires to avoid repeated trips or future taxes. “They’re cashing out,” said Orozco. “People are treating this year like a deadline.”
In 2023, the last full year of data available, over $650 billion was received in remittances by countries worldwide. Roughly a third of that comes from the U.S., with countries with high levels of immigration to American benefitting most from the payments. Mexico, long the region’s largest recipient of U.S. remittances, has seen an unusual 5.8 percent decline in 2025, the first in years. Economists attribute it to a maturing migrant population and fewer recent arrivals.
“There’s a strange irony here,” Orozco argues. “Trump’s deportations—and now his tax threat—are triggering a short-term economic injection into countries he has otherwise tried to sideline.”
Panic Among Migrants
Trump’s immigration policy, however, is only part of the equation. In July, Congress passed the One Big Beautiful Bill Act—a sweeping tax and spending package championed by the president. It includes a 1 percent tax on all remittances sent abroad through cash, money orders or cashier’s checks. Transfers made through U.S. banks or with debit and credit cards are exempt.
That exemption has triggered even more urgency among undocumented workers, who often rely on informal cash-based systems to send money.
“They’re taking out their savings, everything they have,” Aleyda Velásquez, a U.S. citizen who helps support an elderly aunt in Colombia, told Newsweek. “If they own personal belongings, they try to sell them or leave them with someone they trust as a power of attorney.”
Velásquez said several of her undocumented friends, especially those sending money to Mexico, Honduras and Nicaragua, are worried their funds might get withheld or taxed in ways they can’t anticipate. “They’re also really afraid. It’s a moment of uncertainty,” she said.
Remittance platforms have already raised transfer fees in response to rising demand, she added, making it harder for some migrants to afford the cost of sending money home. But many are pushing ahead anyway, fearing their opportunity may soon vanish.
“To make it work, I’ve had to cut back on a lot of things here in New York,” Kevin, the restaurant worker, said. “It’s not easy, but my family depends on that money more than ever.”
While the tax won’t take effect until January, its impact is already being modeled in countries that depend heavily on remittance income. In Colombia, where over 53 percent of remittance inflows come from the U.S., the new law could cut annual remittances by between $60 million and $360 million, depending on how many migrants shift to exempt financial channels, according to estimates reported by Corficolombiana, a major Colombian financial services company.
Even so, Colombia recorded $11.8 billion in remittances in 2024—surpassing revenue from the country’s oil exports. Economists expect the national economy to stay resilient, but the impact from a decline in remittances is likely to be felt more sharply at the household level. More than 80 percent of remittance income goes to food, housing, utilities and education, a pattern mirrored across much of Latin America.
A Cross-Border Cash Debate
Republicans in Congress insist on recouping some of the money migrant workers in America are sending home, arguing it should remain circulating within the U.S. economy. As migration and access to jobs have increased, so too has the flow of remittances to certain countries in recent years.
“It is kind of a double-edged sword,” Ira Mehlman, media director at the Federation for American Immigration Reform (FAIR), told Newsweek in a June interview. FAIR advocates for a more restrictionist immigration policy.
“Yes, it does send money back to people in the home countries, but it also becomes a dependency. If you’re going to be sending your best workers out of the country to work in another country and then wait for the money to come back, it impedes the development that needs to happen in those countries.”
Opponents of a remittance tax, including experts who have studied the issue for years, argue it could have the effect of driving more immigration to the U.S. rather than deterring it.
“Undocumented migrants play a huge role in the U.S. economy, not only as they participate in the labor force, and part of this is that they do send money back home, but a large number of them actually do pay taxes,” Rubi Bledsoe, a research associate at the Center for Strategic and International Studies (CSIS) told Newsweek.
“They also participate in supporting social programs that Americans get access to, without necessarily being able to access them themselves.”
Bledsoe argued that if remittances aren’t being sent back to family and friends, or if the funds are reduced, then those who depend on them may look to come to the U.S. for work as a measure of last resort.
For migrants like Kevin, the calculation is simpler. “If I get sent back, I won’t be able to send anything at all,” he said. “So I send what I can now, while I can.” (https://www.newsweek.com/trumps-immigration-crackdown-is-fueling-a-remittance-boom-10820738)
