A small line buried in Donald Trump’s new legislative proposal could have big consequences for thousands of Ugandan families who depend on money sent home from relatives working in America. The former president’s plan to tax international money transfers by 3.5% has raised alarms in Kampala, where remittances from abroad have become increasingly vital to the country’s economy.

The proposed tax, part of what Trump calls his “One, Big, Beautiful Bill Act,” would apply to all money sent overseas by foreign workers in the U.S., including Ugandans with green cards or work visas. For a country that received $1.42 billion in remittances last year – accounting for more than 5% of Uganda’s entire economy – even a small tax could mean millions less reaching families who rely on these payments for basic needs.

“This comes at the worst possible time,” said a senior official at Uganda’s Finance Ministry who asked not to be named. “We’re already dealing with reduced aid from Western donors, and now they want to tax the money our hardworking citizens send home?” The concern is shared at the highest levels of government, where officials have been counting on growing diaspora payments to help stabilize the economy.

The numbers tell the story of why this matters so much to Uganda. Last year’s record $1.42 billion in remittances marked a 13% increase from the previous year, surpassing traditional foreign aid as the most reliable source of dollars entering the country. Unlike development assistance that often comes with strings attached, this money goes directly to Ugandan households who use it for school fees, medical care, and small business investments.

Bank of Uganda recently introduced new systems to track these money flows and reduce transfer costs, which currently eat up about 15% of each transaction. The government has also been working with regional partners to create special investment opportunities to encourage diaspora Ugandans to send more money through official channels. All these efforts could be undermined if Trump’s tax makes sending money home more expensive.

Uganda isn’t alone in its worries. Countries like India, Mexico and the Philippines – which together receive hundreds of billions in remittances each year – are closely watching the U.S. debate. Indian economists estimate the tax could cost their economy up to $18 billion annually as migrants find cheaper, unofficial ways to send money home.

“The last thing we need is to push these transactions underground,” said World Bank economist Dilip Ratha. “When people stop using banks and licensed transfer services, everyone loses – governments can’t track the money, and families face more risk of fraud.”

In Uganda’s rural villages, where many families survive on monthly payments from relatives abroad, the potential impact hits especially hard. Sarah Nalwoga, a mother of four in Masaka, says the $200 her sister sends from Maryland each month pays for her children’s school fees and malaria medicine. “If that money becomes less, I don’t know what we’ll do,” she said. “Maybe take two children out of school.”

Economists warn reduced remittances could have ripple effects across Uganda’s economy. The dollars sent home help support the shilling’s value and provide crucial foreign currency reserves. Less money coming in could mean higher prices for imported goods like fuel and medicine, hitting poor families hardest.

As the debate over Trump’s proposal continues in Washington, Ugandan officials find themselves in a difficult position – wanting to protect their citizens’ interests but with little power to influence U.S. policy decisions. Some are exploring backup plans, including working with mobile money providers to reduce transfer costs and encouraging diaspora groups to pool investments rather than sending individual remittances.

For now, Ugandan families who depend on money from America can only wait and hope. As one Kampala taxi driver put it: “These politicians play with our lives like it’s a game. That money isn’t luxury – it’s survival.” With Uganda’s economic recovery still fragile, the stakes of this Washington policy debate couldn’t be higher for ordinary citizens half a world away.