President Donald Trump again suggested using tariff revenue to provide Americans with a “dividend,” though Treasury Secretary Scott Bessent said it could come “in lots of forms.”
TL;DR
- President Trump suggested tariff revenue could fund a $2,000 dividend for Americans, excluding high earners.
- Treasury Secretary Scott Bessent stated the dividend could manifest in various forms, possibly from existing tax cuts.
- Tariffs are projected to generate significant revenue, but their purpose is debated in court.
- The dividend's funding mechanism and actual distribution remain unclear, with potential budget implications.
On Sunday, Trump posted on Truth Social that opponents of his tariffs are “fools,” adding that the government is taking in trillions of dollars that will go toward paying down U.S. Debt.
“Record Investment in the USA, plants and factories going up all over the place,” he wrote. “A dividend of at least $2000 a person (not including high income people!) Will be paid to everyone.”
Tariffs are expected to generate $300 billion-$400 billion annually. And over the next 10 years, the Congressional Budget Office has estimated they could produce $3.3 trillion in revenue.
With such high hopes for a massive windfall, Trump has floated a tariff-related payment multiple times in the past. But his latest proposal came just days after his administration told the Supreme Court that tariffs are not meant to generate revenue.
On ABC’s This Week with George Stephanopoulos on Sunday, Bessent said he’s not worried that Trump’s public statements are undercutting his arguments at the high court, which is considering a challenge to his global tariffs enacted under the International Emergency Economic Powers Act.
The Treasury chief said tariffs are meant to rebalance trade, with revenue eventually shifting to domestic taxes as more high-paid manufacturing jobs come back to the U.S.
He added that he hadn’t yet talked to Trump about the $2,000 dividend idea, which would require Congress to pass legislation.
Bessent also highlighted tax measures already enacted within his tax-and-spending legislation as origins for the dividend.
“The $2,000 dividend could come in lots of forms, in lots of ways,” he explained. Perhaps the tax reductions currently on the president's agenda are the sole reason. No taxes on tips, no taxes on overtime pay, and no taxes on Social Security benefits. Auto loan deductibility. So, you know, those are substantial deductions that, you know, are being financed in the tax bill.”
Americans might not receive a check by mail. Bessent's idea that the dividend might not require new funding would also simplify complex budget calculations.
The substantial inflow of tariff revenue has played a role in preventing budget deficits from escalating significantly. However, this relies on the assumption that the revenue collected is indeed allocated to supporting the federal government. Drawing on that money to instead pay for dividends would require the government to issue more debt.
No further information regarding the dividend was provided in Trump's social media announcement. Erica York, a tax policy specialist with The Tax Foundation, undertook some rough estimations.
Assuming the cutoff for “high income” Americans is $100,000, then about 150 million adults would qualify for the dividend, putting the cost at nearly $300 billion, she posted on X, adding that the cost grows if children are Additionally qualified.
“The math gets worse accounting for the full budgetary impact of tariffs: a dollar of tariff revenue offsets about 24 cents of income and payroll tax revenue,” York said. “Adjusting for that, tariffs have raised $90 billion of net revenues compared to Trump’s proposed $300 billion rebate.”