Trump floats tariff ‘dividends’ for Americans, but experts question the math

Amna Nawaz:

President Trump doubled down this week on an idea to send $2,000 rebate checks to tens of millions of Americans. He floated the notion this weekend and has offered no specifics. But the president suggested that the government could send that money to low- and middle-income Americans and still have enough tariff revenue left to make a dent in the national debt.

Most experts say that that math doesn't add up.

To help us get some clarity on the numbers, we're joined now by Erica York. She's vice president of federal tax policy at the Tax Foundation.

Erica, welcome to the "News Hour." Thanks for joining us.

Erica York, Vice President of Federal Tax Policy, Tax Foundation: Thanks for having me.

Amna Nawaz:

So let's begin with those tariffs.

The White House said back in September that tariffs had raised $8 trillion in revenue. But, yesterday, the president cited some different figures. Here's what he had to say in the Oval Office.

President Donald Trump:

This is trillions of dollars we're talking about in terms of the tariff income and all the investment income that's come into our country. We have more than — I would say, right now, more than $18 trillion.

Amna Nawaz:

Erica, do those figures line up with any data you have been able to see?

Erica York:

No.

The Treasury Department has reported that, through September, all tariffs have raised about $195 billion for the federal government. That, of course, includes preexisting tariffs, as well as the new tariffs that the president has imposed this year. If you break it down further using data from CBP, those new tariffs have generated about $117 billion of collections for the Treasury.

Amna Nawaz:

Those numbers are way off from what we're hearing from the president and White House. Do you know where their figures are coming from or what they're based on?

Erica York:

I am not entirely sure. They are very high compared to the actual revenues that we have seen come in. They're high even compared to projections of revenues over the next decade.

At Tax Foundation, we estimate that all the tariffs will raise about $2.4 trillion over the coming decade, so still a mismatch there. I think part of what explains the difference is that the president is precounting things that are very separate from tariff revenues, precounting promises of investments made by foreign countries.

So we have heard of these investment pledges, that a country might invest $100 billion or $300 billion into the U.S. economy. That, of course, would be private sector investment, very different from tax collections that flow to Treasury.

Amna Nawaz:

And I know you and your colleagues have looked into the impact of those tariffs on Americans. What have you found?

Erica York:

We have found that the tariffs are a net negative for the U.S. economy. So we estimate, overall, the economy will shrink by about 0.6 percent if the tariffs remain in place. There will be more than 600,000 fewer full-time jobs.

And the tariffs add up to a tax burden on U.S. households of an average of between $1,200 and $1,600. So, whether that is experienced through higher prices that we have to pay at the store or whether it's experienced through higher costs at businesses, dragging down hiring and dragging down wage growth, the real burden lies with American taxpayers.

Amna Nawaz:

And we know some of that seems to be fueling this conversation around affordability and this proposal of these $2,000 checks that the president is talking about. Take a listen to how we framed that yesterday in the Oval.

Donald Trump:

We're going to issue a dividend to our middle-income people and lower-income people of about $2,000. And we're going to use the remaining tariffs to lower our debt.

Amna Nawaz:

Erica, is a plan like that realistic? And do we have any idea how much something like that would cost?

Erica York:

It doesn't seem like it adds up.

So we don't know exactly who would qualify for these checks. But if it would be something similar to the COVID relief payments, the minimum cost would be about $300 billion. That would be if the cutoff was set at $100,000 and all adults making under that amount got a $2,000 check. It would cost about $300 billion.

So you could easily see the cost go up from there if children qualify, if the income phase-out is higher. And that $300 billion minimum price tag compares to about, like I mentioned earlier, $120 billion of tariff collections through September. So even a even a narrowly targeted rebate would use up all of the collections so far, would have to be deficit-financed.

And that leaves no money left over to reduce the deficit or begin to pay down the debt.

Amna Nawaz:

Well, let me ask you about the other claim there the president made about the tariff revenue helping to significantly pay down the national debt.

The national debt for the country currently stands at $38 trillion. By your math, that's about 200 times the revenue that's actually been brought in by the tariffs so far. Is there any path you see towards tariff revenue going to pay down the national debt?

Erica York:

There's not a path for that, particularly when you take a broader look at all of the policies of the Trump administration.

So, this summer, Trump signed into law the One Big Beautiful Bill Act. That was major tax cut legislation. It did include some spending cuts, but that was a law that increases the deficit. We have heard the president's advisers say that tariff revenues will help pay down that price tag for the tax cut law.

Well, tariff revenues won't earn enough to fully pay for that tax cut law, let alone pay for these $2,000 checks and pay for reducing the debt. So there's just not a viable path to use tax-like tariffs to reduce the debt or even to minimize the deficit that the government runs year after year.

Amna Nawaz:

And, Erica, the tariffs that are currently being challenged in a case before the Supreme Court, how much of that tariff revenue that you cited earlier is part of that challenge? And what is the impact if the Supreme Court rules against the administration in that case?

Erica York:

The emergency tariffs being challenged at the Supreme Court account for about three-fourths of the tariff revenues that have been collected and would be collected over the coming decade under all of the new levies that Trump has imposed.

So if the Supreme Court ultimately decides that those emergency-related tariffs are illegal, it wipes out three-fourths of that revenue generation. Now, it's likely that the president would pursue other authorities to try to continue imposing some of those tariffs, but the remaining authorities that he has are not as broad as what has been done under this emergency law.

So the threshold of revenue that could be raised would be much lower than what we have seen come in under these emergency tariffs.

Amna Nawaz:

All right, that is Erica York of the Tax Foundation.

Thank you so much for offering some clarity on the numbers. We appreciate your time.

Erica York:

Thank you.