Unpacking Trump's $2K Tariff Rebate Plan: Potential Costs and Economic Impact Revealed

Share and Follow

While the idea of a $2,000 dividend from U.S. tariff revenue sounds appealing, recent studies indicate that this proposal might be more expensive than it initially appears.

Earlier this month, former President Donald Trump took to Truth Social, promising Americans a dividend of “at least $2,000 per person” from the year’s tariff revenues. Treasury Secretary Scott Bessent later clarified that these dividends would be earmarked for “working families” and subject to an “income limit.” This approach aligns with previous government payment distribution methods.

Despite assurances from a White House official to The Hill that the Trump administration is dedicated to using tariff revenue for the benefit of Americans, further specifics about the plan remain scarce. Any implementation would require Congressional approval and might encounter significant challenges, notably the shortfall in tariff revenue.

As of September, the U.S. had accrued approximately $195 billion from tariffs enacted under Trump. However, three separate analyses suggest this sum falls significantly short of the amount needed to fund the proposed dividend payouts.

The Committee for a Responsible Federal Budget (CRFB), a nonpartisan budget watchdog group, reported last week that the U.S. tariff revenue would have to total about $600 billion in order to provide $2,000 dividends following the guidelines used for COVID-era stimulus checks.

If the income limit mentioned by Bessent was capped at $100,000 a year, the necessary tariff revenue to supply the $2,000 dividends would be far less, according to the Yale Budget Lab. Its analysis, posted Monday, found that sending one-time $2,000 rebates to qualifying Americans would still cost $450 billion.

At the same income threshold, Alex Durante, a senior economist at the Tax Foundation, said Monday that dividend checks would cost $300 billion, at minimum.

Trump’s use of emergency powers to impose the sweeping tariffs remains at the center of a Supreme Court case. Per The Hill, the Trump administration has acknowledged that billions of dollars in tariff revenue could be refunded if they lose in court. If the lower courts’ rulings are upheld, the CRFB said it would take seven years before tariff revenue could fund $2,000 dividends.

Nonetheless, Trump on Monday said tariff dividends could be sent out next year, and revenue would still be used to pay down the federal deficit.

Even if Trump’s proposal fizzles, Congress does have the chance to pass legislation to pay out tariff rebates.

Sen. Josh Hawley (R-Mo.) in July introduced legislation that would send out payments much like the COVID-era stimulus checks.

Under Hawley’s bill, each adult would receive “at least $600,” as would each dependent child. The total rebate for a DINK household (dual income, no kids), for example, would be at least $1,200, while a family of four could receive $2,400.

Payments could increase “if tariff revenue exceeds current projections for 2025,” according to a press release from Hawley’s office describing the proposed legislation. Payments would also decrease based on household income. The bill’s text says rebates would be reduced based on a taxpayer’s filing status and their adjusted gross income. That income threshold is $150,000 for those filing a joint return; $112,500 for those filing as a head of household; and $75,000 for a single taxpayer.

Trump expressed support for the idea in July, telling reporters that the U.S. has “so much money coming in” because of the tariffs that “we’re thinking about a little rebate.”

“A little rebate for people of a certain income level might be very nice,” he said, while noting that “the big thing we want to do is pay down the debt.”

The federal deficit hit $38 trillion last month, setting a record.

Kevin Hassett, director of the White House National Economic Council, said last week that using DOGE savings to send out payments is “back on the table.”

“I’m sure the president will discuss with congressional leaders whether, because of all of the extra tax revenue, there isn’t more room to get checks back to people,” he said.