U.S. Policy and Currency Moves Create Economic Headwinds for Mexico

Mexico’s economy is facing notable pressures as U.S. immigration policy shifts under President Donald Trump coincide with a stronger Mexican peso, affecting key economic drivers such as remittances, labor dynamics and household incomes.

Recent reporting highlights that tighter U.S. immigration enforcement and a faster-appreciating peso have contributed to declining remittance flows — a cornerstone of Mexico’s foreign income. Remittances, which had grown for over a decade, are now falling, with analysts projecting a 5–6% decline in 2025 linked to migrants’ fears of deportation and labor market deterioration in the U.S. as well as peso strength reducing the dollar value of transfers.

Remittances historically make up a significant share of GDP and household income, especially in rural states where such inflows drive consumption and living standards. A downturn in this flow can therefore weigh on domestic demand, poverty reduction and regional economic growth.

At the same time, the Mexican peso has surged against the U.S. dollar in recent sessions, in part due to global currency dynamics and U.S. economic indicators — which, while supporting import purchasing power, also dampen export competitiveness and reduce the peso value of remittances when converted back for recipient households.

Market Implication: These combined forces — restrictive immigration policies and a strong peso — are creating near-term headwinds for Mexico’s consumer spending, external incomes and overall macro resilience.