To hear President Donald Trump tell it, Americans will receive a significant economic boost next year with the distribution of rebate checks funded by revenue earned from tariffs. Trump has promised that the administration will be issuing these payments “probably the middle of next year” or “a little bit later than that,” with the checks providing “thousands of dollars for individuals of moderate income, middle income.”
Treasury Secretary Scott Bessent, however, is a bit more circumspect. Earlier in November, Bessent told Fox News Sunday that “we will see” about the possibility of issuing checks, acknowledging that Congress would, in fact, need to pass legislation in order for these payments to be issued.
Economic experts, meanwhile, note that any discussion of these payments and their potential impact is checkered with caveats, marked by uncertainty and worries about a potential inflationary impact. The Trump administration has not offered details about how the payments would be structured—for example, what the specific income cap would be, or whether they would be distributed on a per-person or per-household basis. Then there’s the little fact that these payments would not even be fully funded by tariff revenue. Mark Zandi, the chief economist at Moody’s Analytics, believes that the term “tariff dividend checks” is inaccurate.
“To call it a tariff dividend, I think, is elevating in a way that should not be elevated. It’s just simply a stimulus check using taxpayer money,” said Zandi.
Analysis by the Yale Budget Lab estimated that, if the payments were to be dispersed on a per-person basis with an income cap of $100,000, distributing the checks would cost around $450 billion. Other models by the Tax Foundation estimate that the cost of the dividends would range between $279.8 billion and $606.8 billion, depending how the credit is structured. These price tags are significantly greater than the revenue the administration’s tariffs are expected to generate next year.
Trump also has competing fiscal priorities for tariff revenue. According to the White House, the money generated by the tariffs could be used to reduce the deficit, pay for the One Big Beautiful Bill Act—the massive Republican tax and spending law approved over the summer—and, now, cover the cost of these payments. The nonpartisan Congressional Budget Office has estimated that the Republican law would cost around $3 trillion over the next decade. That figure could theoretically be offset by tariff revenue. But those dollars can’t also be used to subsidize dividend checks if their purpose is paying for the tax bill.
“These stimulus checks, regardless of where the income cutoff is, and regardless of how much money the tariffs actually raise, are just pure deficit spending,” said Scott Lincicome, vice president of general economics at the libertarian Cato Institute.
There is precedent for issuing these kinds of rebate checks. However, they are typically administered in a time of significant downturn, as with the stimulus payments that were distributed in the wake of the 2008 economic crisis and the coronavirus pandemic, cataclysmic events that hardly seem comparable to the present moment.
“It’s really hard to see the economic justification for this policy,” said Alex Durante, senior economist at the Tax Foundation. “The kind of environment that we’re in right now where … you do have inflation kind of sticking around 3 percent, it’s really unclear to me why you want to introduce a stimulative policy in that kind of environment.”
Trump’s proposed checks are, in some ways, reminiscent of the stimulus payments that were distributed during the pandemic to Americans earning under a certain income threshold, in 2020 and 2021.
“They’re the same thing. Just cutting a check to people … below certain income thresholds and with no new strings attached,” said Zandi. “From a macroeconomic perspective, I don’t see any difference.”
John Ricco, associate director of policy analysis at the Yale Budget Lab, noted that the 2021 stimulus checks were only one of many deficit-financed programs implemented during the pandemic. Economic boosts to state and local governments, unemployment insurance, and small businesses injected billions of dollars into the economy at the time. Many Republicans blamed the stimulus checks included in President Joe Biden’s 2021 coronavirus response legislation for increasing inflation, though economists are divided on the precise role they played in cost increases, which spiked globally.
“If you tally all of the fiscal spending that was done with all the deficit-financed money we sent to households and businesses and local governments back then, it was something like close to $5 trillion, and that would be basically 10 times as much as what we’re looking at here,” said Ricco.
There are questions about the inflationary impact of distributing billions of dollars in stimulus payments into an economy with relatively low unemployment and an inflation rate currently hovering around 3 percent. If demand is boosted without an increase in supply, it’s a potential recipe for higher prices.
The inflationary impact would also depend on whether households would immediately spend the money or choose to save it. “It’s only in the case if they’re spending a great fraction of these that we would see economic activity pick up, and potentially inflation pick up,” Ricco continued. (For his part, Bessent has encouraged Americans to save money that would be given by the potential checks.)
If the stimulus checks did spur inflation, it’s possible that the Federal Reserve would choose to hold interest rates steady rather than continue to cut them, potentially setting off another conflict with the White House. Trump has long complained about the Fed’s slowness to cut rates, personally targeting Chair Jerome Powell.
“If you were to do a new deficit-financed piece of fiscal support on the order of half a trillion dollars, all else equal, that will increase demand in the economy and make the Fed less likely to cut interest rates, at least in the near term,” said Ricco.
Then there’s the aforementioned issue of congressional approval; despite the Republican majority in Congress, some fiscal conservatives could be wary of approving new stimulus payments. Lincicome noted that, after years of bashing Democrats for the 2021 stimulus checks, this would be the “miniaturized sequel of the very stuff that Republicans were complaining about in 2022, 2023 through the 2024 election.”
“You had a lot of fiscal conservatives hold their nose and vote for the One Big Beautiful Bill based on promises from the administration that this was it. Trump needed to get his tax cuts cemented and hardwired into U.S. law,” said Lincicome. “I think you would see a big chunk of the Republican caucus balk at more deficit spending.”
Meanwhile, the Supreme Court is currently mulling whether Trump’s tariffs are even constitutional. During oral arguments earlier this month, conservative justices expressed skepticism that Trump had the authority to unilaterally impose these levies. If the court rules that the president acted illegally by using emergency powers to implement tariffs without congressional consent, the administration may have to reimburse the revenue generated to American importers.
The Trump administration has insisted that consumers are not the ones bearing the cost of the tariffs, despite evidence to the contrary. Trump himself has also denied that the economy is anything but booming. But the desire to issue these checks is a tacit acknowledgment that the cost of living has become burdensome for the average American and that the tariffs themselves may be part of the cause.
“If their goal is to reduce the consumer harm from tariffs, then they should just consider not doing the tariffs right in the first place,” said Durante.
