Today, Senator Josh Hawley has introduced a bill that would do just that by sending tariff rebate checks to American families. Like the stimulus checks sent to American households during the COVID-19 pandemic, this new initiative aims to deliver targeted financial relief right when people need it most. The rebate checks each family would receive under the proposal would help reduce the financial pressure on American families. These burdens are created by tariffs that the federal government has unconstitutionally implemented.
Legislation to put cash in the hands of individuals and families directly. It’s meant to help those who’ve been negatively impacted by these tariffs. Recent estimates indicate that U.S. households will end up paying billions in costs due to these trade policies. Those tariff increases will bring in enough revenue to pay for the rebate checks. On its face, this establishes a direct connection between the relief policy and the relief measure they propose to take.
There are some catch-all provisions that determine who’s eligible to receive these rebate checks. If your AGI is over $150,000 as a joint filer, you will lose 5% of your benefits. Likewise, single filers making over $75,000 will have this cut come down on them as well. Prioritizing assistance to those who need it most. Of course, there may be value in recognizing higher earners.
Senator Hawley, a Republican from Missouri, hoped that this action would make life easier for working Americans. He stated, “Like President Trump proposed, my legislation would allow hard-working Americans to benefit from the wealth that Trump’s tariffs are returning to this country.”
While we love the idea behind this proposal, its introduction has created serious heartburn among many policy wonks. As a senior fellow at the Urban-Brookings Tax Policy Center, Joseph Rosenberg has sounded the warning bells. Seekins cautions that these rebate checks would make things much worse with respect to the federal budget deficit. He noted how when individuals spend their money, it puts upward pressure on prices. This increase in spending would surely add to inflationary pressures.
The Congressional Budget Office has estimated that former President Trump’s tax-and-spending package will add an astounding $3.4 trillion to the federal deficit. This impact might even extend through 2034. In particular, the long-term implications of this new legislation need to be considered alongside substantial fiscal pressures already in place.
Rosenberg is not alone in his apprehension. Alex Durante, a senior economist at the Tax Foundation, expressed a similar viewpoint, stating, “I would prefer that the revenue was used for deficit reduction rather than just cutting checks to people.” This destructive perspective is emblematic of a larger desire among legislators and policy wonks to worry more about the sustainability of these fiscal policy moves.
Consumers are already contending with increasing price pressures due to tariffs. Consequently, the discussion around how to provide relief from these economic forces is coming into focus. Pandemic-era fiscal stimulus has already added around 2.6 percentage points of inflation in the United States. Their concern is well-founded, as more direct payments would only exacerbate inflationary pressures and undermine attempts to stabilize the economy.