The recent re-election of Donald Trump as President of the United States on November 5, 2024, is expected to have significant implications for remittances across Latin America, including the Philippines. Analysts from Nomura have warned that Trump's anticipated strict immigration policies could negatively impact the flow of remittances to the Philippines, which reached a high of $3.08 billion in July 2024 [e8784dae].
In Latin America, remittances have become a crucial economic lifeline, with a record $159 billion received in 2023, a substantial increase from $62 billion a decade ago. Mexico alone receives about $60 billion in remittances annually, which is equivalent to nearly 4% of its GDP. Central American nations, such as Nicaragua, Honduras, El Salvador, Guatemala, Haiti, and Jamaica, rely even more heavily on these funds, with remittances constituting as much as 28% of GDP in Nicaragua [3464f1a5].
Trump's administration is expected to accelerate deportations and curb immigration, which could restrict this vital flow of capital. Vice President-elect J.D. Vance has suggested deporting up to 1 million undocumented individuals per year, a move reminiscent of Trump's first term, which saw 1.5 million deportations [3464f1a5]. Additionally, proposals for a 10% tax on remittances are gaining traction in several states, including Oklahoma, Florida, Ohio, and Pennsylvania, which could further impact the financial support that families in Latin America and the Philippines receive from abroad [3464f1a5].
The potential tightening of U.S. immigration policy may particularly affect Filipino workers, leading to concerns about reduced remittance inflows that are crucial for many families in the Philippines. Remittances play a vital role in the Philippine economy, contributing significantly to household income and overall economic stability [e8784dae].
Moreover, the Philippine peso has already shown signs of weakness, trading past the 58-level amid uncertainties surrounding the election results and potential policy changes [e8784dae]. The U.S. has been a significant trading partner for the Philippines, accounting for 17.7% of its exports from 2021 to 2023. American demand for Filipino products constituted 3.5% of the Philippines' GDP during the same period, highlighting the importance of maintaining strong trade relations [e8784dae].
As the situation unfolds, the Philippine government and its citizens will need to navigate these challenges to mitigate potential economic disruptions and ensure continued growth in the face of changing U.S. policies. The expiration of Temporary Protected Status (TPS) for many Central Americans, including 184,000 Salvadorans in March 2025 and 55,000 Hondurans in July 2025, adds another layer of complexity to the remittance landscape [3464f1a5].