President Donald Trump claims his tariffs safeguard American businesses, attract manufacturing to the U.S., generate revenue for the federal government, and provide him with negotiation power.
TL;DR
- Tax experts doubt Trump's tariff revenue can fund a $2,000 dividend proposal.
- Tariffs generated $195 billion, but a dividend for all Americans would cost $600 billion.
- The Supreme Court may invalidate Trump's tariffs, potentially requiring refunds to importers.
- Eliminating tariffs, not distributing them, is suggested as a way to provide relief.
He's now asserting that they can also fund a substantial financial gain for American households, pledging a substantial tariff dividend.
The president proposed the idea on his Truth Social media platform Sunday, five days after his Republican Party lost elections in Virginia, New Jersey and elsewhere largely because of voter discontent with his economic stewardship — specifically, the high cost of living.
The president posted that the tariffs are generating so much revenue that "everyone will receive a dividend of at least $2000 per person (excluding high-income individuals)."
Budget experts scoffed at the idea, which conjured memories of the Trump administration’s short-lived plan for DOGE dividend checks financed by billionaire Elon Musk’s federal budget cuts.
"The figures simply aren't accurate," stated Erica York, who serves as vice president of federal tax policy for the nonpartisan Tax Foundation.
Information is limited, with no specifics provided on income thresholds or if funds would be allocated to minors.
Scott Bessent, even Trump's treasury secretary, seemed somewhat surprised by the bold dividend proposal. Speaking on ABC's “This Week,” on Sunday, Bessent stated he hadn't spoken with the president about the dividend and indicated it might not result in Americans receiving a government check. Bessent suggested the rebate could instead be implemented as tax reductions.
The tariffs have indeed generated revenue, amounting to $195 billion in the fiscal year concluding September 30th, a 153% increase from the $77 billion collected in fiscal 2024. However, this revenue represents under 4% of the government's total income and has had a minimal impact on reducing the federal budget deficit, which reached an alarming $1.8 trillion in fiscal 2025.
Budget wonks say Trump’s dividend math doesn’t work.
John Ricco, a Yale University Budget Lab analyst, estimates Trump's tariffs could generate $200 billion to $300 billion annually in revenue. However, a $2,000 dividend, distributed to every American, including children, would incur a cost of $600 billion, according to his statement. “It’s clear that the revenue coming in would not be adequate,”
Ricco pointed out that Trump lacked the ability to pay the dividends independently. Such payments would necessitate legislative action from Congress.
The core of Trump's protectionist trade strategy—substantial tariffs on goods from nearly all nations—might not withstand a legal challenge that has progressed to the U.S. Supreme Court.
During a hearing held last week, the justices sounded skeptical addressed the Trump administration's claim of extensive authority to declare national emergencies as justification for the tariffs. Congress, which possesses constitutional power to impose taxes, including tariffs, was circumvented by Trump.
Should the court invalidate the tariffs, the Trump administration might be returning funds to the importers who remitted them, rather than issuing dividend payments to American households. (Even if he faces defeat at the Supreme Court, Trump could still discover other ways to impose tariffs; however, this process might prove to be unwieldy and lengthy.)
Budget analysts and mainstream economists observe that U.S. Importers are the ones who pay tariffs, and they typically attempt to shift this expense to consumers via increased prices.
The Tax Foundation's York commented on the dividend plan “misses the mark,”, stating, "If the objective is to provide relief to Americans, the tariffs should simply be eliminated."