Former President Donald Trump has offered a unique vision on how to address America’s growing affordability crisis. He proposes distributing rebate checks directly to American citizens, paid for by the tariffs he collected during his presidency. This proposal harkens back to the stimulus checks received by many Americans during the pandemic recession. It has fueled debates about how it might impact the economy and inflation.
Trump’s proposal comes as Americans express increasing worry about inflation and costs, which have risen to the top of the list of priorities. He indicated that these rebate checks could be issued in August, leveraging the more than $220 billion in tariff revenue generated under his policies. This new revenue is the result of a combination of tariffs he instituted. It counts ones that were already in place when he took office.
Background of Tariff Revenue
Over the course of his presidency, Trump presided over the collection of more than $220 billion in new tariffs. More than half—about $100 billion—of this total was raised through the imposition of trade-restrictive tariffs. They can be used to provide rebate checks or direct cash payments to American citizens. Most recently, Trump has called for a return to one-time payments of at least $2,000 per person.
“A dividend of at least $2000 a person (not including high income people!) will be paid to everyone.” – Donald Trump
The mechanics of distributing these rebate checks would be similar to the API used throughout the pandemic. In 2020, Americans received stimulus checks towards the end of Trump’s first term, followed by additional payments in 2021 under President Joe Biden’s administration. The chosen distribution method raised a lot of eyebrows. Compared to the paper checks, which on average took around 20 weeks to get into recipients’ hands, direct deposit users received their money in as little as a week.
Economic Implications
Trump’s proposal would likely give the economy a short-term lift by putting more cash into households. Experts stress that this tidal wave of cash could still backfire and cause prices to rocket up. If the Federal Reserve responds by raising its benchmark interest rate, it may counteract the intended benefits of these rebate checks.
The former president acknowledged this potential risk when he stated, “We’re taking in so much money that we may very well make a dividend to the people of America.” Most worrisome of all, perhaps, are the economists who object to sending out checks right now. They think it might increase inflation, which is already the biggest problem out there.
Sending just $2,000 checks to all 163 million Americans who filed tax returns in 2024 would cost at least $326 billion. This unprecedented fiscal challenge seeks to protect and save lives for millions of American citizens. This figure raises some critical questions regarding the long-term sustainability of such a financial endeavor. Will it actually provide permanent relief to families in need?
Public Reaction and Concerns
Although Trump’s plan promises to relieve financial pressure on Americans, the public is still divided in their response. We hear a lot from citizens about how they don’t believe another round of payments would do much to fix inflation’s underlying causes. Debates over this proposal tend to get consumed by the economic development aspects that come over the long term. The possible impacts on prices are the scariest part.
Critics contend that just redistributing tariff revenue wouldn’t fix the systemic problems causing costs to rise. The reality is that we won’t know how these rebate checks will improve affordability for Americans. In the meantime, our nation is grappling with serious and pervasive economic insecurity.