Market "big event": Trump for the first time specifies the exact amount for "tariff refund," will the $2,000-per-person "pandemic check" return?
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Trump’s proposal to distribute $2,000 from tariff revenues to American citizens not only reminds people of stimulus checks during the COVID-19 pandemic, but may also bring similar economic risks.
On Monday, U.S. President Trump posted on his social platform stating, the returned tariff revenue will be distributed as $2,000 to American citizens, while the remaining tariff revenue will be used to “substantially repay national debt.”
WallstreetCN previously reported that on Sunday, November 9, Trump posted on social media, claiming that his tariff policy would bring “at least $2,000 dividends to everyone,” except for high-income groups.
This proposal directly recalls the fiscal stimulus measures during the pandemic. In December 2020, Trump pressured U.S. lawmakers to raise the pandemic relief check amount from the previously approved $600 to $2,000.
Now, some economists believe that it was precisely this excessive government spending that caused the United States to experience its worst inflation since the early 1980s from 2021 to 2022. More than four years later, the consumer price index still has not fully returned to pre-pandemic levels.
Costly “Dividend” Plan
According to preliminary calculations by the moderate American watchdog group Committee for a Responsible Federal Budget, if the “dividend” plan is modeled after the pandemic payment method, its total cost would reach as high as $600 billion.
This figure far exceeds the tariff revenue capacity of the U.S. government. By fiscal year ending September, total net U.S. tariff revenue stood at $195 billion, and many economists predict tariff revenue for the 2025 calendar year to be about $300 billion.
Moreover, Trump has not specified how the $2,000 “dividend” would be implemented, or whether he will seek legislative approval. Reportedly, U.S. National Economic Council Director Hassett indicated the plan does require Congressional approval.
Nobel Prize-winning economist Paul Krugman considers this a “terrible idea.” He said:
At a time when our government debt is deepening, taking a revenue source and handing out money is an extremely irresponsible act.
On Monday, Trump said that after the $2,000 payment, the "remaining" tariff revenue would be used to “significantly repay national debt.” However, this claim faces practical difficulties.
Currently, America’s record-high tariff income is being used to limit federal deficit levels. To reduce federal debt by nominal value, a fiscal surplus is needed. The last annual surplus in the U.S. was more than 20 years ago, and the current deficit scale is close to $2 trillion, a historic high.
Legal Challenges and Alternative Explanations
The U.S. Supreme Court is reviewing the legality of Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose import tariffs.
The Committee for a Responsible Federal Budget said in an email Monday, if these tariffs are deemed invalid, it will take the government seven years to collect enough tariff revenue to pay for the “dividend checks.”
Customs and export control lawyer Lawrence Friedman pointed out:
If tariffs are illegally collected, there should be appropriate remedies, but the administration has not suggested that payments to individual U.S. citizens would be that remedy.
Meanwhile, Treasury Secretary Bessent raised another possibility in a media interview.
He hinted that the “$2,000 dividend” could be reflected as a tax cut. For example, “tip tax exemption, overtime tax exemption, Social Security exemption, and auto loan interest deduction,” etc.
In other words, this may not be a cash payment. However, Bessent also admitted that he has not communicated with Trump about the matter, indicating the final shape of the proposal is still very uncertain.
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