President Donald Trump's proposal to fund $2,000 "tariff dividend" checks for American households using revenue from his new import tariffs faces a massive arithmetic gap, with estimated costs vastly outpacing revenues by hundreds of billions of dollars.
In recent months, Trump proposed using import tariff revenue to distribute $2,000 payments to low- and middle-income Americans.
However, new analysis from the Tax Foundation shows the math simply doesn't add up.
Trump's Tariff Rebate Plan Faces Major Budget Hole
In 2025, Trump's newly imposed tariffs are projected to bring in $158.4 billion in revenue, with an additional $207.5 billion expected in 2026.
But depending on the structure of the rebate program, the cost could range from $279.8 billion to as much as $606.8 billion—far exceeding expected tariff collections in both years.
Even if every dollar of tariff revenue were redirected toward these payments, the government would still fall short of covering even the most limited version of the program.
Three Rebate Scenarios, All in the Red
The Tax Foundation modeled three different scenarios based on possible eligibility cutoffs:
- Option 1: A strict $100,000 income limit for all filers, costing $279.8 billion for just tax filers and their spouses.
- Option 2: A 5% phase-out starting at $100,000, pushing the cost up to $320.9 billion.
- Option 3: A more flexible income phase-out by filing status (similar to COVID-19 stimulus checks), costing $347.6 billion in its narrowest form.
When dependents and non-filers are included, the costs balloon significantly.
The broadest version of Option 3 would require $606.8 billion in a single year—nearly four times the expected 2025 tariff revenue.
“All tariff dividend designs would cost more than the revenue that the president's new tariffs will generate in 2025, and many designs would use all the revenue they will generate in 2026 too,” said Erica York, economist at the Tax Foundation's Center for Federal Tax Policy.
Tariff Revenues Are Overstated, Analysts Say
Through September 2025, $174 billion in customs duties have been collected.
However, this figure doesn't reflect the "income and payroll tax offset"—a fiscal effect in which indirect taxes like tariffs reduce income bases and therefore shrink federal tax collections.
The Tax Foundation applies a 23% to 25% reduction to account for this offset. After adjustment, the net revenue generated by Trump's new tariffs in 2025 falls to $158.4 billion, with 2026 expected to yield $207.5 billion.
That means even in the best-case revenue scenario, rebates would consume not just all the new tariff proceeds, but also any chance of reducing the deficit or financing tax cuts.
“Even factoring in the collections that will come in over the remaining three months of the year, tariff money would not pay for even the narrowest tariff dividend option,” York added.
A $6 Trillion Price Tag Over A Decade
The cost implications could be staggering if the rebates are paid annually.
Under the Option 3, repeating the $2,000 payments every year would result in a $5.97 trillion burden from 2026 through 2034.
That compares to an estimated $2.3 trillion in total revenue from Trump's new tariffs over the same period—before considering the economic drag that could lower tax collections.
Under nearly every modeled outcome, Trump's tariff dividends would sharply expand, not shrink, the federal deficit.
“A better way to provide relief from the burden of tariffs would be to eliminate the tariffs,” York stated.
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