President Trump floats giving Americans a $2000 Tariff rebate check.

 

President Donald Trump. NBC News/Bloomberg/Getty.

President Donald Trump has proposed giving Americans a $2000 tariff rebate check. NBC News. Trump said on Truth Social that he wanted Americans to get the checks, but would exclude the wealthy. The statement appears to indicate the plan is in the extreme early stages as even his Treasury Secretary was in the dark about what the plan would be. Complicating things is the fact that the government is still shut down and no negotiations over the payments will occur until the government reopens. This is not the first time Trump has asked for these payments and a bill that would have provided $600 checks has lingered in the Senate. 

My Comment:

It seems the message that the Republicans got after the 2025 elections is "it's the economy stupid". This seems like an obvious bone to throw to the American people who are still very unhappy with the state of the economy. A large stimulus check from tariff revenue might change some peoples minds. 

Tariffs would indeed cover the costs if the wealth restrictions are similar to the previous stimulus checks provided in the wake of the pandemic. Tariff revenue has been about $200 billion a year, if projections stay accurate, and that could presumably pay for these checks, though it would obviously use most of that profit from both this year and next year. It's absolutely doable. 

Inflation would be a slight concern in this scenario though. It won't be like previous checks, which were paid for by printing billions of dollars. Instead, we would be using money we already have. The problem is that people would probably spend this money on goods and services, which would obviously lead to inflation. Not much inflation, but folks might not be so happy to get the checks if everything they wanted to buy was getting more expensive. Still, it's not going to result in the runaway inflation that we saw due to previous spending as this time, things would be paid for. 

The main problem is how do you get this into place. The Democrats have currently shut down the government pretty much out of spite (though there are early reports that they will end the shutdown this week), so I don't see them going along with this without concessions on what they want. This is pretty irrelevant though as I am assuming this would go through the reconciliation process, which doesn't need any Democratic support in either chamber given Republican control over both houses. 

The bigger problem is the existence of fiscal hawks in the Senate. Senators like Rand Paul and Mike Lee could blow up the whole thing because they want tariff revenue to go to paying down government debt. They have an argument too as sooner or later we have to deal with the debt and it would be wise for at least some of the tariff money to go to that. 

My guess is that there is a decent chance that some form of checks are cut in a deal passed with those Republicans but it's likely not going to be $2000. Something like the $600 checks already proposed in the Senate, or perhaps as high as $1000, is a lot more likely than the full $2000. It's no sure thing, obviously, but I think it's probably close to 50/50 that checks are cut. It's also possible that some kind of deal with a few Democrats could neuter these fiscal hawks in the Senate, but that seems a lot less likely.

What impact would any checks have? I am guessing mostly positive. These checks are popular even if they risk inflation for pretty obvious reasons. There is something very appealing about the "little guy" getting something back from the government and folks would likely use this money to stimulate economic growth. If folks are smart they will use the money to pay down debt but I am guessing most people will spend it on nonsense, which, to be fair, I probably will too. 

Politically it's a winner too. There are folks that voted for Republicans solely for these kinds of handouts and I can't blame them. And it's further evidence that the Republicans "get it" when it comes to economic issues. That's been a concern for the past few months as Trump has had a major focus on foreign policy and immigration instead of the economy. A major fiscal refocus could help the Republicans a great deal in the midterms.