Trump’s $2,000 Tariff Dividend Checks Will Blow a Huge Hole in the Deficit. Here’s the Math.

Money left over after tariff dividend payments would be used to pay down the debt, President Donald Trump said in a social-media post Monday. (Anna Moneymaker/Getty Images)

President Donald Trump says he wants to send $2,000 “tariff dividends” to most Americans using the money the levies have brought in so far. There is virtually no way to do so without blowing an even bigger hole in the federal debt.

Trump faces pressure on tariffs from multiple quarters. During oral arguments last week, several Supreme Court justices sounded skeptical of the administration’s use of an emergency-powers law to impose many of the levies. A loss in the case could lead to the government refunding billions of dollars to companies that paid the duties.

At the same time, polls show that most Americans think Trump isn’t focused enough on affordability. A recent NBC News poll found two-thirds of Americans say Trump has fallen short of their expectations on cost-of-living issues.

Paying a tariff dividend could help with both of those issues.

“Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2000 a person (not including high income people!) will be paid to everyone,” Trump wrote in a social media post over the weekend.

It isn’t clear how seriously investors should take Trump’s proposal. Some Republicans have said they’re already worried about further increasing the deficit, and it’s almost certain that any attempt to pay tariff dividends would worsen the government’s fiscal problems.

Federal debt held by the public is near 100% of gross domestic product, equivalent to the total output of the U.S. economy in a year. There is no clear threshold where the level of debt becomes too much, but interest payments on the debt surpassed $1 trillion for the first time last fiscal year, which ended in September.

A $2,000 tariff dividend could cost the federal government $600 billion under certain conditions, according to an estimate Monday by the Committee for a Responsible Federal Budget, a nonpartisan nonprofit. There is no formal plan for who might receive tariff dividends, and the group assumed they would resemble payments to households during Covid. The price tag would far exceed the $100 billion the tariffs have raised so far and the $300 billion projected for this year.

If paid annually, $2,000 tariff dividends would add $6 trillion to the deficit over 10 years, the group estimates. That is double the revenue the tariffs might bring in, which might otherwise be used to offset the deficit.

“Given we have not yet revealed any specifics here, back-of-the-envelope analyses about the dividends are baseless speculation,” a White House official said.

Sen. Josh Hawley (R., Mo.) in July introduced a bill that would send “rebate checks” of at least $600 to each adult and dependent child, but the bill hasn’t yet gained enough support to move forward.

White House National Economic Council Director Kevin Hassett told reporters Monday that the governments’ financial picture had improved since then.

“I think that when we studied the matter in the summer that we thought that deficit reduction might be the best use of those moneys, but we’ve had a big surge in tax revenues,” Hassett said.

In an interview with CNBC Tuesday, Hassett added that “there’s more room, even for deficit hawks, to think about rebate checks, like the president talked about, because we’ve actually done such a good job cutting spending.”

In the fiscal year that ended Sept. 30, the federal government collected about $5.23 trillion in revenue, up $317 billion from the year before, according to the Treasury Department. Within that, individual income taxes rose about $160 billion, while corporate income taxes fell by $100 billion.

The deficit was 6.3% of gross domestic product in fiscal year 2024, according to the nonpartisan Congressional Budget Office. The 2025 deficit was 5.9% of GDP, or $1.8 trillion.

But much of that decline has come from the expected reduction in pandemic-era spending and from government accounting practices that pull forward savings that won’t actually take place for years, said Jessica Riedl, a senior fellow at the Manhattan Institute. The tax law that Congress passed earlier this year, for example, included student-loan changes estimated to save $320 billion over a decade. Because of how the government scores the budget, nearly half of that was booked in August and September of this year, Riedl said.

Whatever real revenue or savings have been realized under Trump’s policies wouldn’t be nearly enough to offset a tariff refund to Americans that could cost hundreds of billions of dollars, Riedl said.

“The tariffs have brought in an extra $110 billion so far above the baseline, which clearly does not just justify $600 billion in promised tax rebates. The numbers just don’t add up,” Riedl said.

Treasury Secretary Scott Bessent said Monday he had not talked to Trump about the tariff dividend proposal, while suggesting it could come in the form of decreases in taxes American households will see from parts of the tax and spending bill passed earlier.

Tariffs “help consumers” and bring down the budget deficit, Bessent said Tuesday on MSNBC’s Morning Joe. And by doing that “we are bringing down inflation,” he said.

Write to Joe Light at joe.light@barrons.com