Sporting a chunky gold Jesus medallion around his neck and an earring that spells out his name in diamond studs, José discusses the particulars of his shipping business with a reporter during a November meeting in a Brooklyn parking lot. Sitting in his Lincoln Navigator, with his window rolled down, José—who asks that his last name not be printed—says he charges $350 per piece to transport suitcases on flights from New York to Mexican states such as Puebla and Tlaxcala. That’s steep, but for some of the 11.7 million Mexicans living in the U.S., it’s a more reliable way of sending high-value items (electronics and medicines, for instance) without running the risk that relatives have to ransom a shipment trapped at customs.
José’s door-to-door service has its perils: Clients sometimes also stuff gold jewelry or cash inside their luggage, which Mexican customs officers can confiscate. Still, business could boom if President-elect Donald Trump follows through on his campaign threat to block the estimated 6.2 million undocumented Mexican immigrants from sending money home, as a way to force Mexico to foot the bill for his border wall.
Data collected by Mexico’s central bank show that remittances are on track to break the $26 billion record from 2007. Banco de México Governor Agustín Carstens in April called Trump’s plan to confiscate the money Mexicans send home a violation of property rights. He added that this and the then-candidate’s call for renegotiating the North American Free Trade Agreement posed the biggest threats to Mexico’s economy.
In a June 15 document, the Trump campaign proposed tightening rules on wire service companies, requiring them to verify that their clients are in the U.S. legally. Experts say such a move would likely drive the business back underground, undoing years of work by U.S. and Mexican authorities to regularize the flow of funds between the two countries. It “would stimulate an informal economy for remittances,” says Jesús Cervantes of the Center for Latin American Monetary Studies in Mexico City.
According to a 2007 report from the Federal Reserve Bank of Dallas, electronic transfers made up 53 percent of total remittances to Mexico in 1996; by 2006 the figure had jumped to 93 percent. A return to informal channels would complicate the work of law enforcement officials trying to clamp down on money laundering and terrorist financing.
Josefa Torrez, a Mexican immigrant who folds clothes at a laundromat in the Sunset Park section of Brooklyn, says she would do whatever it takes—including using a courier—to keep sending money to her 90-year-old mother in Mexico, who suffers from crippling osteoporosis. “I would risk stuffing money in hidden places,” says Torrez, who’d just finished wiring money home from a storefront near her work. “Because we have no choice.”
Evangelina Flores says that if she had to she’d go back to stuffing envelopes with cash and sending them from Chicago via registered mail to her elderly sister, the way she did three decades ago, even though the money didn’t always make it there. And whenever possible, she’ll continue to send money home with relatives, she says.
All of this would be a reversal of progress achieved under another Republican administration. When George W. Bush was in office, the U.S. Federal Reserve began working with Mexico’s central bank to ease the flow of remittances from north to south. The effort culminated in the 2005 launch of an automated clearinghouse that enables those with an account at a U.S. bank or credit union to make direct transfers. This, along with the proliferation of debit and credit cards, has reduced transaction costs for both senders and recipients.
Alely, a stay-at-home mom who asked that her last name not be used because she isn’t a legal resident, is trying to open a bank account in New York to bypass any Trump-imposed restrictions. She’s been working to get the paperwork she needs through the Mexican consulate. (Immediately after the election, Mexico’s Foreign Ministry drew up a plan that enlists the country’s 50 consulates in the U.S. to monitor and prevent abuses against immigrants.) When it comes to sending money back home, “I think we will always find a way,” Alely says.
The bottom line: Mexicans living in the U.S. are fearful Trump will make good on a threat to block money transfers to relatives south of the border.
To contact the authors of this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net, Isabella Cota in Mexico City at icota@bloomberg.net.
To contact the editor responsible for this story: Cristina Lindblad at mlindblad1@bloomberg.net.
©2016 Bloomberg L.P.
