SAN SALVADOR — Money sent home by Salvadorans living in the United States continues to rise even as the Trump administration’s immigration enforcement intensifies, a counterintuitive trend that economists attribute less to confidence in the future and more to fear of what comes next.
Remittances to El Salvador rose roughly 16.3 percent in a recent monthly comparison tracked by financial firm BBVA, part of a broader regional surge that has seen transfers to Honduras, Guatemala, Nicaragua and El Salvador collectively climb by roughly 20 percent so far this year compared with the same period last year, an increase not seen in the region for decades outside the immediate aftermath of the pandemic. Manuel Orozco, who directs the migration, remittances and development program at the Inter-American Dialogue in Washington, describes the pattern as a deliberate, defensive family decision: migrants are sending as much as they can now, anticipating they may not be able to continue once enforcement actions catch up with them.
The average remittance transaction has climbed from roughly $300 to nearly $400, according to Orozco’s research, a shift consistent with accounts from Salvadoran migrants who describe increasing their monthly transfers by hundreds of dollars out of fear that their bank accounts could be frozen or seized before they are deported. That anxiety is not abstract: El Salvador’s Central Reserve Bank has historically reported remittances accounting for roughly 17 to 18 percent of the country’s gross domestic product, meaning shifts in this flow carry direct consequences for household consumption, small-business revenue, and overall macroeconomic stability nationwide.
The dependence cuts both ways, and a real threat now looms over the very flows currently accelerating. Temporary Protected Status for roughly 232,000 Salvadoran beneficiaries is set to expire on September 9, 2026, absent congressional action, and financial analysts estimate that TPS holders alone account for approximately one-fifth of remittance flows to the country. Should the designation lapse without a legislative fix, projections from the National TPS Alliance suggest remittance levels could fall by more than $1.2 billion, a shock that would land squarely on the household consumption that current, elevated remittance flows are propping up.
Congress has separately considered, but not enacted, a federal excise tax on remittances as part of broader immigration legislation debated over the past year. Proposed rates of 3 to 5 percent, aimed initially at non-citizens using services such as Western Union or bank wire transfers, would strike El Salvador with particular force: one widely cited analysis from the Center for Global Development projected the country could lose the equivalent of roughly 0.6 percent of its national income even at a modest 1 percent rate. That the tax has not passed does not eliminate the underlying pressure; the Inter-American Development Bank has noted that the extraordinary remittance growth of 2025, driven substantially by migrants drawing down savings in anticipation of deportation, is already beginning to ease in 2026 as those savings are exhausted, even as flows for the year so far remain elevated relative to historical norms.
Compounding the pressure, deportations to El Salvador have already resumed at scale: more than 16,000 Salvadorans were deported in 2025 alone, according to government figures, adding pressure on a domestic labor market with limited capacity to reabsorb returnees. Humanitarian response plans across the region were funded at critically low levels in 2025, with funding in El Salvador at just 22 percent of identified needs, leaving fewer institutional resources available to help returnees or families navigating the loss of remittance income when it eventually arrives.
For a country whose dollarized economy has relied on diaspora transfers as a stabilizing force amid gang-related upheaval, pandemic disruption, and now an uncertain U.S. immigration posture, the current remittance boom serves less as a sign of economic health than as a barometer of anxiety among Salvadorans abroad. Whether that anxiety converts into the feared TPS expiration, a federal remittance tax, or simply a slow normalization as 2025’s exceptional inflows taper off, the coming twelve months will test how durable El Salvador’s remittance-dependent household economy really is once the current surge of fear-driven transfers subsides.
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