TARIFF DIVIDEND CHECKS

TARIFF DIVIDEND CHECKS?  REALLY?

Don’t Spend the Money Just Yet

If I were you, I wouldn’t make any plans to spend the $2,000 tariff “dividend” rebates President Trump proposed for low- and middle-income taxpayers. The idea apparently is to offset the higher costs of consumer goods created by Trump’s broad-based tariffs that kicked in last year. As nice as it sounds, there are a few problems with this notion, which I address here.

1. What “dividend”? The word dividend suggests “profits” or earnings from an endeavor. If the federal government is going to distribute $2,000 checks to taxpayers, one would think such a distribution would come from “profits” (or in government budgeting parlance, “surpluses”) acquired through excess tax revenue. But that’s not even close to reality.

In 2025, the federal government collected a total of $5.313 trillion, up about 6 percent, or $317 billion, over 2024. The additional revenue is not entirely attributable to tariffs. According to the U.S. Customs and Boarder Protection, Trade Statistics FY 2025, tariff revenue was about $218 billion. Contrary to what the administration is touting, that’s hardly “trillions” in new tariff revenue.

But even worse, federal spending grew faster than revenue in 2025. In 2024, total federal spending was about $6.75 trillion. In 2025, Congress boosted spending to $7.1 trillion. That results in a deficit (not a surplus) of $1.787 trillion.

So where’s the profit? There is no surplus revenue over expenses that can be returned to taxpayers. None. Not only is there no “profit” from which to fund a dividend, the year-over-year deficit is worse than last year, even with the additional $218 billion in tariff money.

So it’s not just impossible to distribute tariff “dividends,” it’s likewise impossible to begin paying down the $38-plus trillion national debt as suggested by the president. Before we can begin to think about how we might pay down that unimaginable debt, we have to stop amassing new debt, something Congress simply will not do.

2. Only Congress can spend money. Speaking of Congress, Article I, section 9, clause 7 of the U.S. Constitution provides:

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a Regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

Despite the president’s claims to the contrary, he does not have unilateral authority to issue tariff dividends (or tax refunds of any kind) as he chooses. The fact is the president can’t spend a dime. Only Congress has the authority to “appropriate” funds for any purpose, which is the agonizing budgeting process we’ve watched being debated year after year.

The president may (and does) propose spending for this or that purpose, but only Congress can authorize that spending with an “appropriation made by law.” So the funding for $300 to $600 billion in tariff dividends, which is what the program would cost, would have to be authorized by Congress, not by the Executive branch.

I’m not saying Congress can’t do it. But if it did, it would be with more borrowed money. Congress would be issuing what amounts to welfare checks to citizens deemed to be “in need” somehow. The program would resemble the $1,200 “economic impact payments” issued to taxpayers during the COVID-19 pandemic. Between those payments and several other federal give-away programs, trillions of dollars were pumped into the economy causing a sharp rise in inflation that hit Americans very hard.

3. What will the Supreme Court do? The greatest current unknown here is what the Supreme Court will do in the consolidated cases of Learning Resources v. Trump, and Trump v. V.O.S. Selections, Inc. In those cases, and others, over one hundred companies brought lawsuits for refunds of tariffs imposed by the administration during 2025. The suits challenge the president’s authority to unilaterally impose tariffs under the International Emergency Economic Powers Act. That act allows the president to impose tariffs unilaterally on imports that threaten national security. Lower courts have found in favor of the businesses seeking refunds.

Oral arguments on the cases were held before the Supreme Court on November 5, 2025. No decision has yet been issued. If the court rules against the administration, most (if not all) of the tariff revenue will have to be refunded to the businesses that paid the taxes. That will most certainly spell the end for any tariff dividend to the American people. I have to believe Congress will wait to take any legislative action on tariff refunds until after the court rules.

Conclusion

As I said at the outset, I strongly recommend you don’t spend your $2,000 tariff refund check before you have it in hand. It’s not likely you’re going to get it.

Check out Dan’s podcast on this issue
https://youtu.be/U0AGEn27emc?si=HMdDtQjfS01SaOvv

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