Uncertainty surrounds how much money Barbadians in the United States will send home to their families now that the Donald Trump administration has introduced a one per cent tax on remittances leaving that country.
The tax took effect on January 1 and is to be enforced when customers make their transfers with cash, money orders, and cashier’s cheques, meaning that all digital remittances are tax free.
Economist and financial analyst Jeremy Stephen was unsure if the new tax would cause US-based Bajans to reduce their financial support to loved ones here, but he noted that it would not be easy for everyone to do so electronically.
He suggested that the tax was more ideological than economic and could be intended to punish the export of US dollars, potentially reducing the spending power of recipient countries as part of an effort to redirect “any and every investment towards American industry that is physically in the US”.
‘More ideological’
“The fact is that the majority of US dollars that’s invested or sent overseas always makes its way back into American products, services and capital markets. So the one per cent is a little more ideological than it is economical, especially when it pertains to small open economies like ours,” Stephen said.
He also noted that Barbados’ economy did not rely on remittances when compared with other countries, including some larger Caribbean nations.
This assessment was backed up by information from the Central Bank of Barbados.
The country’s monetary authority shared data showing that total remittances into the island reached an estimated $94.2 million in 2025.
This followed $111.1 million in 2021, $97.4 million in 2022, $90.1 million in 2023 and $93.9 million in 2024.
Remittances leaving Barbados in that period were $45.9 million (2021), $47.5 million (2022), $50.3 million (2023), $58.4 million (2024), and an estimated $61.6 million in 2025. Remittances to and from the US were included in these figures.
Meanwhile, the Inter-American Development Bank (IDB), in its new report Remittances To Latin America And The Caribbean In 2025: Adaptations In A Context Of Uncertainty, concluded that the one per cent tax “probably will not have a significant direct impact on remittance flows”.
IDB experts suggested that “once the tax takes effect, what could happen is a reduction in observed flows by official agencies compiling statistics, if families choose to send remittances through channels outside government oversight”.
This included remittances being “sent via informal means, such as giving cash to friends travelling to the country of origin, in ways that prevent these flows from being captured by current statistical systems and keep them invisible to monetary authorities”.
The IDB study, which estimated that overall remittances into the Caribbean would be $41.6 billion last year, did not include information on Barbados.
“Barbados and The Bahamas also receive remittances, but they are not statistically significant, so the authorities of those countries do not publish this data, and for this reason, they are not included in this document,” the report stated.
Dominican Republic major recipient
The IDB estimated that most of the money sent from the Caribbean diaspora last year was destined for the Dominican Republic ($23.8 billion), Haiti ($9.8 billion), Jamaica ($7.2 billion), Guyana ($3 billion) and Trinidad and Tobago ($722 million).
American money transfer company Western Union, which facilitates remittance payments to and from Barbados, did not say how it expected the one per cent tax to impact transfers from the US to the island.
When contacted, Carolina Sottocorno, Western Union’s communications manager for Latin America and the Caribbean, said that “at this time, we decline to comment”.
However, the company has been sensitising clients about the potential impact of the tax, informing them that if, for example, they send $1 000 abroad and pay with cash at a retail location “you would owe an extra $10 in tax on top of your normal fees”.
“The good news is that many common payment methods are exempt from this additional one per cent tax. Customers who pay with any of the following will not be charged the new tax: debit or credit cards, bank accounts, digital wallets, [or] prepaid cards,” Western Union explained.
Stephen said that with these cash payments now targeted by US authorities, it was important for digital transactions to be made more inclusive to both senders in the US and recipients in Barbados.
The IDB report, which noted that 50.4 per cent of remittances to the Caribbean came from the US, argued that “remittances might even increase following the implementation of the tax, to cover any costs it might impose on receiving families”.
A bigger concern researchers saw for recipients in Barbados and elsewhere was if the US continued to crack down on migrants, making it “likely that growth in remittance flows will continue to slow in the coming years”. (SC)
