Trump floats tariff 'dividends' even while plan shows major flaws

President Donald Trump has bragged many times about the revenue tariffs are bringing in — money paid by American businesses, who pass some of the costs on to consumers. Over the weekend, Trump pushed the idea of paying that money back to Americans, in the form of $2,000 payments.

The idea is in no way a detailed proposal, but what Trump has said about it presents multiple steep challenges for the administration: the plan may cost far more than Trump is saying, and Trump's rhetoric around tariff revenue may undermine his administration's pro-tariff arguments at the Supreme Court. In addition, his administration is already saying that the plan won't even involve direct payments to taxpayers, even while Trump continues to push that notion.

Trump summarized much of what he's said about his tariff rebate plan speaking with reporters on Monday.

"We're going to issue a dividend to our middle income people and lower income people of about $2,000," he said. "And we're going to use the remaining tariffs to lower our debt."

While details are scant, budget experts are already saying that there just isn't enough money for this idea.

"Even with the most conservative estimates applied to it, it doesn't work," said Erica York, vice president of federal tax policy at the right-leaning Tax Foundation.

By her math, if the rebates went to people making under $100,000 per year, that would cost way more than the amount of revenue tariffs will bring in.

"So you'll see at least a $100 billion gap there between what we can expect the tariffs to generate for the U.S. government versus what the president is promising to spend on tariff rebates for American citizens."

She added that even if the money went out only to people making $75,000 or less annually, there still wouldn't be enough revenue, by her calculations.

In other words, the proposal could add to the debt — the opposite of what Trump said he wanted it to do.

"To me, this seems less of a thought out policy proposal and more of, 'A $2,000 check sounds good. People are struggling with affordability. They're tired of inflation. What can I say to make them think I'm trying to do something?'" York said.

Then again, the White House is already saying the plan might not involve a straightforward check or payment sent to taxpayers, like the stimulus money during the height of COVID. Treasury Secretary Scott Bessent said on ABC's This Week on Sunday that voters might receive the money in the form of tax cuts that Congress already passed earlier this year.

"The $2,000 dividend could come in lots of forms," Bessent said. "It could be just the tax decreases that we are seeing on the president's agenda. You know, no tax on tips, no tax on overtime, no tax on Social Security."

NPR asked the White House for additional details on the plan.

"The Administration is committed to putting this money to good use for the American people," said a White House official not authorized to speak on the record.

Talking about revenues puts the Trump administration in a tricky position right now. Just last week, the Supreme Court heard arguments against some of Trump's tariffs, with tariff opponents saying Congress — not the president — has the power to levy taxes.

In response, administration lawyers argued before the Supreme Court that revenues aren't the point of the tariffs.

"These are regulatory tariffs," Solicitor General John Sauer said to the justices. "They are not revenue-raising tariffs. The fact that they raise revenue is only incidental."

Asked on Sunday to square that argument with Trump's revenue talk, Bessent said the tariffs are ultimately meant to bring businesses back into the U.S.

No matter what, Congress would have to authorize any payments. And even if the government were open, it's not a given that would happen.
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