Unless you’ve been living under a rock, you’ll probably have spotted the news that Donald Trump has been promising to deliver $2,000 to almost every US citizen as a ‘dividend’ from monies raised by his tariffs.
But, have you considered the fact that this could actually be a bad thing, and maybe not exactly as promised?
Could Donald Trump’s tariff dividends actually be a bad thing?
It sounds like a great promise, giving much-needed help to those struggling to make ends meet, offering a bit of support during the ongoing affordability crisis and the cost of… well, everything.
As Trump himself explained it: “We’ve taken in hundreds of billions of dollars in tariff money. We’re going to be issuing dividends… probably the middle of next year, a little bit later than that, of thousands of dollars for individuals of moderate income, middle income.”
Great stuff, right?
Putting aside who actually qualifies for this help, or when the money might be delivered, and a load of other criteria, the idea has been championed by Trump’s supporters.
But there’s another side to the story - one that is told by those who aren’t Trump loyalists, and by many economists.
Credit: Leon Neal/Getty
First off, does the math work?
Well, the tariffs are definitely bringing money into the government, that’s true.
In total they are expected to generate around $154 billion in 2025 and $207 billion in 2026, according to the Tax Foundation.
Who pays those tariffs though?
In short, US importers pay the taxes, not - as Trump often claims - foreign countries.
Those importers pass that cost onto the American consumer, meaning prices go up.
So, you may have already paid for your $2,000 dividend.
Furthermore, it’s impossible to estimate the true cost of the dividend checks, as the full details aren’t available.
If they are given to everyone earning under $100,000, only to taxpayers and their spouses, it would still cost $279 billion - loads more than the projected revenue.
That’s the lowest end of the scale, too - other estimates suggest it could cost as much as $606 billion.
Unrealistic, at best.
Credit: Samuel Corum/Getty
Other obstacles exist, too
There are other problems afoot, such as any legislation needing to pass Congress to become law - which is far from certain.
Republicans - even Trump supporters - are fiscally conservative, so handing out free money, an often-used tactic of denigrating ‘socialists’ and opponents, might not appeal.
What’s more, giving everyone $2,000 could also encourage more price rises and serve only to worsen the affordability crisis.
Remember the Covid-19 stimulus checks under Joe Biden?
Those were derided by Republicans for pushing up prices - would this be different?
Many economists are skeptical of whether dishing out free checks would be a good way of stimulating the economy, as former Trump economic adviser Stephen Moore told CNN: “Sending out checks to people is a bad way to stimulate the economy,
“If there is tariff revenue, that should be used to cut income taxes across the board.
“Stimulus checks only stimulate inflation.”
Then there’s the Supreme Court, which could declare the dividends illegal, sticking the whole thing into issue.
Oh, and couple that with the fact that these types of payments are often reserved for an emergency, such as Covid-19 or the threat of recession, and you’ve got a number of reasons that the proposed system might either never happen, or be a bad thing to happen if it does.
Ed Mills, Washington policy analyst at Raymond James, also told CNN: “It’s almost like we shouldn’t want stimulus checks to happen, because it would be an indicator of something wrong.
“This is a break-the-glass, use in case of emergency tool.”