Trump brings up "universal cash handouts" again: considering using tariff revenues for tax rebates, about $1,000-$2,000.

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In response to the partial shutdown of the federal government, Trump once again put forward a much-discussed fiscal proposal — directly handing out cash to the American public. He stated that he is considering using revenue generated from his tariff policies to issue rebate checks ranging from $1,000 to $2,000 to the public, but behind this “grand giveaway” for everyone is his estimation of tariff revenues far exceeding official projections and an intensifying political standoff with Congressional Democrats.

Trump disclosed this idea during an interview on October 2. He likened this potential sum to “almost like a dividend for the American people.” This remark came after Congress failed to reach a funding agreement, resulting in the federal government entering a partial shutdown on October 1.

While proposing the idea of distributing cash to the entire public, Trump also issued a stern warning to Democrats on the other side of the deadlock. He said, if the government shutdown continues, federal employees may face layoffs and some government programs could be cut.

This proposal is not new. According to a CBS News report in July, as early as July, Trump said he was considering a rebate plan based on tariff revenue, mentioning at the time that the rebate could target “people at certain income levels,” but no specific threshold was provided.

Huge Gap in Tariff Revenue Projections

The funding base for Trump’s plan to give money to all Americans rests on his optimistic predictions for tariff revenues, but these figures differ considerably from official estimates.

In the interview, Trump claimed that revenue from the new tariffs had “just started,” but could eventually reach $1 trillion a year. However, according to information previously disclosed by the media, Treasury Secretary Bessent predicted last month that the annual tariff revenue from Trump’s tariff policy could surpass $500 billion. In July this year, Bessent told the media that annual tariff revenue was expected to increase to $300 billion. These figures are all far below Trump’s trillion-dollar target, raising market questions about the sustainability of funding this plan.

At the same time, Trump mentioned another use for these funds — paying down government debt. He said part of the money would help pay down the federal debt, which has already reached $37.64 trillion. This debt level is roughly consistent with data released by the U.S. Treasury.

During the interview, Trump explicitly pointed the finger at Congressional Democrats, claiming that if the shutdown continues, “there could be layoffs, and it’s their fault.” He further warned:

“We can cut the programs they want, the programs they like, and those programs will be permanently cut.”

Old Topic Revisited: Pay Debt First or Refund All Americans?

In fact, the idea of using tariff income to give rebates to the public is not new. As early as this July, Trump had revealed a similar idea to the media.

According to a CBS report on July 25, Trump stated at the time, “We are considering some rebates,” but he also emphasized, “The big thing we want to do is pay down the debt.” This indicated that, in his earlier vision, paying off the massive national debt was prioritized over distributing money to the public. He also added that the rebate might target “people at certain income levels,” but again did not provide a specific threshold.

From prioritizing paying down debt to now explicitly proposing a $1,000–2,000 “dividend for all,” Trump’s emphasis seems to have subtly shifted, especially in the context of the government shutdown. The political intent of this proposal appears more pronounced. Whether for debt repayment or rebates, the source and means of using tariff income directly affect American businesses and consumers, and its actual implementation faces legal limitations.

According to previous media reports, the cost of tariffs is borne by U.S. importers, such as retailers like Walmart or manufacturers like Ford that need to import materials and components for production. Although some companies choose to absorb the increased costs themselves, the latest inflation reports show that higher tariffs may be gradually passing through to consumer prices.

Legally, distributing such rebate checks usually requires changes to tax law, meaning Congress must pass new tax legislation authorizing the Treasury Department to make these payments. Notably, a large-scale tax and spending bill passed by lawmakers earlier this month and signed into law by Trump on July 4, although it included some new tax breaks—such as tax relief for low- and middle-income seniors—did not contain any rebate provisions based on tariff revenue.

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