Following significant cuts to foreign assistance and the introduction of steep tariffs, the Trump administration is proposing a new tax on remittances that could disproportionately affect African nations.
The proposed legislation, termed the “One Big, Beautiful Bill,” is expected to make the United States the most costly country among the Group of 7 for sending money internationally, further impacting impoverished nations already struggling from previous aid reductions.
If enacted, the bill would impose a federal tax on all remittances sent from the U.S., affecting millions of families who depend on financial support from relatives working in America.
Latin American countries would face substantial financial losses, but African nations, where poverty is more prevalent, would be hit harder. For instance, Nigerians would lose approximately $215 million, while Gambia and Liberia would see significant losses relative to their gross national income, with remittances accounting for about a quarter of their economies. Senegal, the country most reliant on remittances according to the World Bank, would also be adversely affected.
In 2024, sub-Saharan Africa received nearly $10 billion in remittances from the United States, nearly matching the $12 billion in foreign assistance before the Trump administration took office.
Critics argue that the new tax would effectively impose a double tax on immigrants, as they already pay income tax on their earnings. The proposed legislation would add a 3.5 percent federal tax on top of the approximately 6 percent charged by banks and remittance companies, totaling nearly $10 for every $100 sent. This would position the U.S. as the most expensive option for remittance transfers among the G7 nations.
For individuals like Helena Saykiamien, a 75-year-old widow in Liberia, the new tax would complicate her financial situation. She relies on the $200 monthly remittance from her daughter in the U.S. to cover household expenses, including food and school fees for her grandchildren. Saykiamien expressed concern over the additional burden the tax would impose on her family.
The U.S. is already one of the priciest places globally for sending remittances, with companies passing on various taxes to consumers in the form of fees. According to the World Bank, Africans pay higher remittance costs than any other region.
Experts warn that the proposed tax could push millions deeper into poverty, exacerbate illegal migration, and hinder economic growth in African nations already grappling with substantial debt. The bill is seen as an attempt to discourage immigration to the U.S. and encourage those currently residing in the country to return to their home nations.
In light of the potential impacts, analysts suggest that people may resort to less secure methods of transferring money, such as using informal couriers or cryptocurrency.
Amma Gyampo, a Ghanaian entrepreneur, criticized the tax as detrimental to the generosity of the diaspora, indicating that economic hardship often leads to increased migration rather than decreased movement.
The United Nations aims to reduce global remittance fees to below 3 percent by 2030, a target that remains unachieved, with the current average being double that figure.
Saykiamien reflected on Liberia's historical ties to the U.S., noting that the country was founded by emancipated American slaves. She described the proposed tax as a punitive measure and expressed her belief that it is unfair for the U.S. to impose such a burden on those who have familial connections to the country.