Donald Trump promised to spend “some of that tariff money” helping farmers. This funding will go directly to those hurt by the retaliatory tariffs, particularly those slapped on by China. The former president’s proposal is especially welcome given the backdrop of nearly three years of self-inflicted trade turmoil that has hurt thousands of agricultural producers. His administration has floated the idea of using tariff money to address the country’s $22 trillion+ federal deficit. Currently, that debt stands at nearly $40 trillion.
The conversation about tariff revenue has become incendiary. Trump is highlighting the financial benefits for service members and their families who need affordable child care. Yet serious questions linger about whether these funds are actually being distributed equitably or efficiently.
Tariff Revenue Allocation
In a striking announcement, Trump stated that the $260 billion generated from tariffs will not be directed toward reducing the national debt. Instead, he proposed using this revenue to fund long-term priorities, such as a new refund check program he suggested.
“A dividend of at least $2000 a person (not including high income people!) will be paid to everyone,” Trump declared on Truth Social. This very significant statement leaves much to be desired on details of such a plan, especially around proposed income and asset caps for eligibility.
Experts have pushed back against Trump’s rosy projections. They note that even if we did spend every single cent of increased tariff revenue to pay off the debt, it would only pay off less than 1% of the amount. This year, we brought in roughly $129 billion in tariff revenue. Half of this amount is linked to a significant tariff case that is now pending before the Supreme Court.
Support for Farmers and Military Service Members
Farmers have been some of the most severely impacted by retaliatory tariffs enacted by countries such as China. In turn, Trump focused on helping these producers of the nation’s bounty. Last week, he declared that almost 1.5 million U.S. service members will soon be getting checks for $1,776. This funding is drawn from the “billions of dollars” collected in fees through retaliatory tariffs.
Trump said at a rally the other week that his tariffs and the Omnibus We Just Passed Have Done Wonders Already. He celebrated that over 1,450,000 military service members will receive a special ‘Warrior Dividend’ bonus before Christmas.
While these initiatives appear beneficial on the surface, critics question whether the funding generated through tariffs is sufficient to sustain such programs alongside other proposed tax cuts.
Future Plans and Economic Growth
In recent weeks, Trump has proposed several different ideas for spending tariff revenue. He indicated that this new revenue could replace revenue lost from tax cuts his administration has already implemented or announced. “I believe that at some point in the not‑too‑distant future, you won’t even have income tax to pay because the money we’re taking in is so great,” Trump asserted, envisioning a future where tax burdens might be significantly alleviated.
Along with helping farmers and service members, Trump promised to improve access to child care. He acknowledged, for instance, that the bottom-line fiscal effect on child care investments seems modest when stacked up against broader economic growth proposals. He added that it remains a key component of any wider approach to shore up economic security for families.