 "Trump wants to pay $2,000 tariff cheques to Americans — problem is Republicans aren’t keen")
Cornered by the cost-of-living crisis affecting Americans, US President Donald Trump has announced handing out $2,000 a person as ’tariff rebate'.
“We’ve taken in hundreds of billions of dollars in tariff money. We’re going to be issuing dividends…probably the middle of next year, a little bit later than that, of thousands of dollars for individuals of moderate income, middle income,” said Trump on Monday.
Trump’s view is that the revenue that the US government has generated from tariffs should be used to provide relief to the public. But the idea is both economically misguided and politically naive.
The move will likely require congressional approval and fiscal hawks among Republicans have suggested they may not approve it. Trump has already angered fiscal hawks with his policies that have broken all of his electoral promises.
Consider this: The US national debt —the total money the country owes— has touched $37 trillion and is on its way to surpass $50 trillion over the next decade and more than a third of upcoming new debt is said to be directly a result of Trump’s policies.
Why Trump’s $2,000 cheques are on shaky ground?
Senior administration officials have already suggested the move will have a tough journey.
Treasury Secretary Scott Bessent said it will require legislation. National Economic Council Director Kevin Hassett suggested the same.
“It’s something that will require legislation, but if you look at how much tariff revenue has been coming in, then there would actually be enough room to cover those checks and not go into the rest of the budget. “We’re actively studying the matter and getting the numbers straight so the president has all the choices he needs to decide what to do,” said Hasset.
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View AllBad economics, poor math
Trump’s plan is both bad on economic grounds and mathematics.
The Tax Foundation has assessed that the US government could raise $158.4 billion in revenue from tariffs in 2025 and $207.5 billion in 2026. These sums will fail to cover 2,000 checks.
In a conservative scenario, if checks are sent out only to tax-filers and spouses, and had a hard cut off at $100,000 in individual income, they would still cost $279.8 billion, according to the Tax Foundation’s analysis published by CNN.
That would be $121 billion more than projected revenue from tariffs this year.
In a liberal scenario where cheques are sent to tax-filers and non-filers as well as spouses and dependents, that would cost up to $606.8 billion — nearly double the combined 2025 and 2026 projected tariff revenue.
Deficit hawks were already reluctant to back the president’s tax law and this would only magnify budget worries.
Sending out cheques to people is a bad way to stimulate the economy, according to Stephen Moore, the Co-founder of Unleash Prosperity and a former Trump economic adviser.
“If there is tariff revenue, that should be used to cut income taxes across the board. Stimulus checks only stimulate inflation,” Moore told CNN.
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