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Topics: US News, Politics, Donald Trump
Britt Jones
After Donald Trump told Americans they can expect to see ‘tariff dividends’ land in their bank, some reasons why it probably won’t happen have been revealed.
Just weeks ago, Trump publicly announced to all Americans that they could enjoy a $2,000 payment through his 'tariff dividends'.
Taking to Truth Social, he shared his policy, writing: "People that are against Tariffs are FOOLS! We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price. 401k’s are Highest EVER.
"We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2000 a person (not including high income people!) will be paid to everyone."
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However, Treasury Secretary Scott Bessent said this payment would be for those who make under $100,000.
Anyway, while the POTUS promised the rebate checks next year, there are a host of reasons why it could all fail.
One of the biggest reasons that have been theorized which will cause the checks to not go around is that the tariffs just won’t be enough to stretch to everyone in the US.
According to the Tax Foundation’s estimates, the tariffs are projected to raise $158.4 billion this year, and then another $207.5 billion in 2026.
When the Tax Foundation modeled three designs for tariff dividend, the total money needed to send dividends to every family in need was more than what the tariffs would bring in as a total profit per year.
The analysis found that it would cost between $279.8 billion and $606.8 billion, even if it was only sent to those who pay tax and spouses.
When it comes to major decisions like this, Congress need to sign off on it.
So, the dividend checks could be voted against if they believe it could upset budgets for the year.
According to Scott Lincicome, vice president of general economics at the Cato Institute, who spoke with CNN: “I find it extremely implausible that Republican budget hawks are just going to be OK with blowing another $300 billion to $600 billion.”
Considering the national debt reached $38 trillion last month, it could put a damper on Trump’s checks being accepted.
“It’ll never pass. We have a $37 trillion debt,” Republican Sen. Bernie Moreno told reporters in July, as per Business Insider.
There’s no doubt that US citizens would spend the checks if they received it, and if it’s to purchase US goods, it will increase demand without increasing supply.
When people spend more, suppliers drive prices to make a profit, which then makes it harder for people to rebuy the same product when they no longer have the money to afford the new price.
Similar to how Joe Biden’s 2021 stimulus checks contributed to the inflation, the tariff dividends could do the same thing.
The Supreme Court justices haven't exactly been vocal about supporting Trump’s 'reciprocal tariffs' that he rolled out under the International Emergency Economic Powers Act (IEEPA).
“If the Supreme Court says the bulk of the tariffs are illegal, that could throw a wrench in the tariff rebate plan,” said Erica York, vice president of federal tax policy at the Tax Foundation, as per CNN.