Former President Donald Trump recently announced a plan to provide a $2,000 dividend to American citizens, claiming it would be funded by tariff revenue. This proposal echoes the three stimulus checks issued during the COVID-19 pandemic, two of which were authorized by Trump himself. The dividend would directly benefit around 150 million Americans – approximately $300 billion. Economic experts and government officials are doubtful about its practicality and where the money would come from.
In a subsequent post, Trump declared that we all should be paid a dividend of no less than $2000 apiece. He made sure to stress that this payment does not include all high earners! He stressed that the focus of the initiative should be on the average American. This has been the major theme of his political career. These proposed $2,000 payments would be similar to the pandemic-era stimulus checks. Those Bigger Checks are a whopping $3,200 per tax filer, plus additional amounts for each child.
According to Erica York, a policy expert at the Tax Foundation, the dividend could potentially cost the federal government around $300 billion. This number is much higher than the tariff revenue that’s been collected to date. As of September 30, the U.S. Treasury Department reported that the federal government had collected $195 billion in tariff-related revenue this fiscal year.
Trump’s vision sounded great, but then Treasury Secretary Scott Bessent raised serious concerns about whether the dividend payments were even possible. In return, he suggested that the payout be instead tied to tax savings. These savings would be realized from Trump’s domestic spending initiatives, rather than one-to-one cash payments through tariffs.
“It could be just the tax decreases that we are seeing on the president’s agenda. No tax on tips, no tax on overtime, no tax on Social Security, deductibility on auto loans. Those are substantial deductions that are being financed in the tax bill.” – Scott Bessent
Bessent’s comments on the need to diversify funding indicate an understanding that it is not sustainable to fund such a large dividend entirely through tariffs. Solicitor General John Sauer argued even more strongly that “the point that [the tariffs] generate revenue is merely incidental.” This statement suggests that the primary purpose of tariffs is to rebalance trade rather than to generate significant revenue for government programs.
Specifically, as the federal debt passes $38 trillion. This astounding sum immediately begs a deeper question, especially when we consider the effect of adding other financial obligations, like these new dividend payments. As a reminder, last year the U.S. median household income was $83,730. This stark figure highlights the economic hardships that many families are still experiencing.
Trump’s supporters say that tariffs are necessary to protect American jobs and industries. In a previous statement, he asserted, “People that are against Tariffs are FOOLS! We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price. 401k’s are Highest EVER.” Even if delivered in a sarcastic manner, this rhetoric is indicative of his ongoing faith in tariffs as a way to create economic prosperity.
Negotiations around the dividend proposal are still at play. Given our current economic reality and fiscal obligations, it remains unclear how realistic or attainable this is. A third round of direct payments would be welcome relief for the majority of Americans. It presents major obstacles in terms of funding and economic competitiveness.
