Trump's Mexico Wall Remittances Plan Draws Scorn

Donald Trump's proposed plan to hold Mexico's economy hostage unless it pays for his proposed wall between that country and the United States is drawing criticism from political opponents and fiscal experts.

Under the plan, which Trump outlined in a two-page memo published by The Washington Post on Tuesday, federal rules governing the transfer of money to foreign countries would be changed. The plan would prevent immigrants in the U.S. without documentation from wiring money to relatives in their home country—a move Trump says would put a dent in the approximately $25 billion that Mexicans living abroad send home each year, not all of which comes from the U.S.

Critics said Trump's plan won't work. "The idea that we're going to track every Western Union bit of money that's being sent to Mexico—good luck with that," President Barack Obama said of the plan on Tuesday.

Indeed, some economists say Trump's plan would backfire. If the immigrants weren't allowed to send money legally, they would send it illegally, says Sonia Plaza, a senior economist at the World Bank. "They're going to send the money in any case…. A lot of that money [would go] underground."

In fact, such a plan might be disastrous for both countries' economies. Were Mexico to lose the billions of dollars it receives from Mexicans living in the U.S. each year, the country's economy could collapse and the number of Mexican immigrants heading to the U.S., which is currently negative, would likely skyrocket. Keeping immigration low, of course, is a key plank of Trump's campaign.

Things would be no better for the U.S., as remittances "economically benefit the country where the remittance-senders work," writes Michael Clemens, an economist at the Center for Global Development. "The bottom line: The more U.S. dollars are sent to Mexico, the more the U.S. economy benefits."

Not to mention that Trump would be sued. He "is giving an extremely broad definition of this section of the Patriot Act and what it allows, and it'd surely be litigated," Stuart Anderson, executive director of the National Foundation for American Policy, a nonpartisan think tank in Virginia, told the Post.

The most recent data from the World Bank show that, of all Latin American countries, Mexico receives the largest share of remittances from the U.S. In 2014, remittances accounted for 1.9 percent of the country's gross domestic product. By comparison, remittances account for 41.7 percent of Tajikistan's GDP, 29.2 percent of Nepal's and 22.7 percent of Haiti's.

Blocking remittances completely would be an unprecedented move. Even at the height of the Cold War, the U.S. allowed Cuban exiles to send remittances back home to their relatives.