President Trump began his second term with a trade war, and the sentiment among US workers has been anything but great. Last week, however, the president surprised his cabinet and introduced a new idea: sending out a $2,000 “dividend” check to Americans. Using revenue from the trade war, Trump is proposing the influx of money be put into people’s pockets as well as “lower our debt.”
What’s old is new. This isn’t the first time the president has floated sending out checks, and the idea faces countless hurdles were it ever to become law. However, one thing remains certain: sending out tariff rebates does not provide a long-term solution for families, but ending the trade war would.
The proposal comes at an inconvenient time for the president. Trump’s handling of tariffs is largely unpopular with Americans, and even the more conservative bloc of justices at a recent Supreme Court hearing on this topic seemed skeptical of POTUS’ approach.
This is the second time in 2025 the president has called for checks to be sent out to Americans from all the tariff revenue. Though no action has been taken, Sen. Josh Hawley, R-Missouri, introduced legislation over the summer to help legitimize Trump’s idea.
It’s true that the tariffs are bringing in revenue to US coffers. All in all, the tariffs Trump has instituted are projected to raise $217 billion annually. That’s billions of dollars that Americans themselves, not foreigners, would be paying in tariffs to the US government.
But Trump’s latest proposal faces an even simpler problem: the math, even under the most favorable estimates, doesn’t work.
President Trump suggested that the $2,000 checks would be given to only low- and middle-income citizens. There are roughly 150 million Americans earning under $100,000 a year, meaning at a minimum this policy would cost $300 billion. Nearly $90 billion off from what he would need to cover the costs.
But Trump is not just promising that his trade war will lead to payments for some workers; he’s also claiming that there will be money left over to “substantially” pay down our national debt.
It remains unclear whether the tariff dividends would be one-time or ongoing. Nevertheless, in the near-term, the proposed $2,000 payments would absorb all the tariff revenue the government has already collected. That’s problematic because President Trump’s advisers have already counted that revenue as offsetting some of the multi-trillion-dollar price tag of the recently enacted One Big Beautiful Bill Act (OBBBA).
While economic growth from the OBBBA could help offset some of its cost, economic harm from the tariffs is hampering that effect. Further, tariff revenue cannot simultaneously be used to offset the cost of major legislation, to send out $2,000 payments to American citizens, and to pay down the debt—there’s simply not enough revenue.
Instead, the US would be left with an even larger budget deficit, adding to the debt rather than shrinking it, and the growth provisions from OBBBA won’t work as intended. Tariff dividends and the resulting higher deficits would also risk pushing inflation higher, at a time when it is still hovering above the Fed’s 2 percent target.
If lawmakers face a choice between using the influx of tariff revenue to send out dividend checks or reduce the deficit, they should clearly choose deficit reduction.
But the best way to ensure Americans get the relief they deserve is to end the trade war. This would eliminate the self-imposed tax hike President Trump has single-handedly placed on American households while allowing his signature legislative achievement to grow the economy.
Alex Durante is a senior economist at the Tax Foundation.