Inside El Super, a Mexican grocery store chain, there is a line that forms in front of the market’s financial center. There, people can pay bills, cash checks but most importantly, send money to their families in other countries.
Every 15 days, Susana waits in that line. She is a refugee from Michoacan, Mexico and has spent the past year sending money back to her hometown. Across the Americas, millions of families rely on remittances — money sent by migrants working in the United States to loved ones back home.
“Estoy arreglando un local que tengo [en México]”, Susana said, “y pues pago mi seguro de vida, porque tengo un seguro de vida allá...” (“I’m fixing up a property that I have [in Mexico] and I’m also paying for my life insurance that I have over there…”)
Susana has steadily increased the amount of money she’s been sending. And she’s not alone — it’s a growing trend amongst Latin American migrants.
Despite lower rates of migration, the volume of remittances has increased by at least 20% for many countries in Latin America, with the exception of Mexico – making Susana a bit of an outlier.
Earlier this year, the Inter-American Dialogue, a Washington-based research group, interviewed migrants to better understand why this is happening. And not surprising, they found fear of deportation and possible loss of work to be the common cause.
“They basically took [...] a sort of preemptive approach to mitigate the potential loss of sending money in the future by sending a little bit more today,” said Manuel Orozco, director of the migration, remittances and development program at the Inter-American Dialogue.
“The current policy will not encourage anyone to stay. It's actually encouraged them to return as soon as possible,” Orozco said.
The termination of humanitarian parole and the loss of temporary protected status for multiple countries has rendered many migrants vulnerable to deportation. Remittances to countries whose migrants are the current target of the Trump Administration’s deportation crackdown have risen.
In Nicaragua, they rose by 22% compared to last year — a $350 million increase. Meanwhile, the U.S. deportation of Nicaraguans has increased by 52% amidst the termination of their Temporary Protected Status in July.
“If they get deported, they rather send as much as they can now so that the relatives can be covered, considering that once they are deported, they won't be able to continue to send the money,” Orozco said.
Remittances are one of the biggest foreign capital inflows in the world, reaching a record $818 billion in 2023. They are the largest source of external financing for many countries, making up over 20% of the GDP for Central America. These money transfers are person-to-person, providing economic stability for many Latin American families with relatives in the United States. The funds also keep local businesses afloat during economic uncertainty, making remittances a lifeline for these countries.
On January 1st, a new tax on remittances will raise the cost of these transfers. Lobbyists successfully lowered the tax to 1 percent from the initial 5 percent proposal. But this isn’t the first time migrants have been threatened with a remittance tax.
“We have many instances in the U.S. that we can look to as examples,” said University of Minnesota professor Paul Vaaler, who specializes in migrant remittances and entrepreneurship in developing countries . “Certain states have tried to tax remittance transactions, …they just go underground again”
He said Oklahoma tried to curb remittances by imposing a fee on these transfers which could be reclaimed via an income tax credit – something out of reach for undocumented migrants.
“You can see the same policy intent here. It's to single out and some would say, punish migrant transactors who are less likely to be well documented,” Vaaler said.
Vaaler believes this tax will not generate any significant revenue, such was the case in Oklahoma. Any potential decrease in regulated remittances next year won’t necessarily mean the money flow has slowed down, he said.
“Migrants are incredibly intelligent and they're incredibly self interested when it comes to getting money home to the people they love in their communities. They’ll find a way around it,” Vaaler said.
During the past 20 years a lot of progress has been made in bringing remittance transactions above board. They weren’t always as trackable and regulated as they are today. Age-old systems of money transfers such as “hawala” have been used for thousands of years in the Middle East and South Asia.
“[Immigrants] are also incredibly important agents of economic development, especially poverty alleviation back home,” Vaaler said . “And the beauty of it is, if we just leave [remittances] alone, it'll work.”
Vaaler suspects remittance transfers will continue out of the public eye. Some experts also predict an increase in digital transfers – as was the case for Mexico whose electronic transfers made up 98.8% of total inflows.
Remittance transfers are especially popular amongst new migrant arrivals, who are often less likely to have bank accounts. For those working without authorization, it is valuable to keep these transactions untraceable – making digital transfers a risk.
Despite fears, people like Susana continue to support their family back home.
“Yo vine con un propósito acá,” Susana said. “No pienso tampoco quedarme en vivir aquí.” (I came here with one purpose. I’m not considering staying here to live.”)
Susana came to the United States with one goal in mind: to send money back home. Her refugee status has given her the privilege to work and she intends to work for as long as she can. Even if it means having little money left for herself while in the U.S.
“Hasta vendiendo dulces afuera de una marketa lo hecho aquí y no me da pena decirlo.” (“I’ve even sold candies outside of markets here and I’m not embarrassed to admit it.”)
“Yo lo vi como una oportunidad nada más para ayudar más a mi familia,” she said. “Pero únicamente eso y me regreso.” (“I saw this as an opportunity to help my family, but just that and I’ll go back.”)