Is a $2,000 Tariff Rebate Check on the Way? Not So Fast

Is financial relief on the way in the form of a rebate check from the federal government? While President Donald Trump floated the idea of using tariff revenue to pay for the rebate, financial experts caution that it is too early to start counting on this money. Here is a closer look at Trump's idea, as well as the potential roadblocks.

Trump Signals Plans to Offer Tariff Rebate Checks

The president raised eyebrows on Sunday when he posted his idea to offer a dividend of at least $2000 per person as a "tariff rebate check." The Truth Social post is a continuation of the idea that the president first proposed in August, when he said that Americans could be eligible to see a portion of the revenues from his tariff program.

Trump's tariffs have been one of the most controversial programs of his second term. Although American businesses have borne the brunt of the import tariffs, they are understandably passing the additional costs on to consumers. According to the U.S. Treasury Department, the government has brought in over $220 billion in tariff revenue since Trump took office.

The idea of a tariff rebate is similar to the stimulus checks that millions of Americans received during the pandemic. However, unlike these stimulus rebates, Trump suggested that the proposed tariff rebate checks would come from the pool of money collected by importers.

Despite what Trump said about the possibility of a tariff rebate check, the rest of his team does not seem to be entirely on board. Treasury Secretary Scott Bessent appeared to brush off the idea when speaking with the media on Sunday. Bessent confirmed that there are no official proposals to distribute this revenue, noting that the $2,000 payments could be awarded "in lots of forms."

Diving into the specific numbers, the president's proposed stimulus checks would cost about $326 billion, well over the amount of tariff revenue that has been collected thus far. The president said in his Truth Social post that the rebate would not apply to wealthy Americans; however, he did not specify the income cutoff. The White House also did not indicate the income requirements when asked about it on Monday.

The Tax Foundation broke down the numbers further on Monday. Should the tariff rebates cap out at Americans making less than $100,000, there would still be about 150 million American adults eligible for the check. That would translate to a cost of about $300 billion. This figure does not square up with the president's other comment that there would still be money left over to pay down the country's $40 trillion in debt.

Other Issues Complicating the Potential Tariff Rebate

In addition to the question of where the money will come from, the U.S. Supreme Court could also stand as a roadblock to the distribution of the checks. The highest court in the land has been skeptical about the legality of Trump leaning on his use of emergency powers to impose his tariffs. This means that the court could step in to disrupt the chances that the checks are distributed as Trump plans.

Past stimulus checks have required approval from Congress. These checks have historically been issued during times of dire emergencies or during major recessions. Neither of these factors is at play now, meaning that the president may find it difficult to garner the necessary support from Congress to pass the measure.

Economic experts also warn that the rebate checks could actually worsen the worrisome rate of inflation. Skyrocketing prices are a top concern of Americans in recent months. While the checks might lead to a temporary boost in spending, demand could outpace supply in the process. This would inevitably lead to higher prices and the chance that the Federal Reserve will need to raise the benchmark interest rate to mitigate the surge in costs.

All of these factors will make it more difficult for the president to push through his idea. Should the rebate indeed come to fruition, those who elect to receive direct deposit checks could see the money within a week of approval. Americans who elect paper checks could be waiting for months, based on historical data detailing the distribution of the stimulus checks.

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