In response to growing concerns about inflation and the overall affordability of basic necessities, President Donald Trump is considering sending $2,000 rebate checks funded by tariff revenue to help ease rising living costs. “We’re going to be doing a dividend to the people, low and middle, moderate-income people, of at least $2,000,” the president stated. Tariffs are expected to generate at least $158 billion in revenue in 2025 and roughly $2.3 trillion over ten years.
According to The Wall Street Journal, the idea is receiving a chilly reception from members of Congress. Some argue that the revenue should go toward paying down the $38 trillion national debt, while others have suggested alternative uses. President Trump has also said that some tariff revenue would be directed to farmers harmed by the trade conflict between the United States and China as part of an economic “aid package.”
Still, some policymakers are expressing openness to the proposal. Senator Josh Hawley (R-MO), for instance, has introduced legislation to provide rebate checks funded by tariff revenue. The Administration reportedly believes it can secure bipartisan support for the $2,000 rebate.
The real question is whether this is sound policy. It certainly has political appeal. A $2,000 check that Americans can spend, save, or use to pay down debt would be popular. But it may ultimately make affordability problems worse by fueling inflation.
The inflation spike during President Joe Biden’s administration resulted largely from unprecedented levels of federal stimulus spending—much of which began during President Trump’s first term and accelerated under Biden during the pandemic. Massive federal outlays helped drive prices higher, and Americans are still dealing with the consequences.
Meanwhile, federal finances remain bleak. Last year’s budget deficit hit $1.8 trillion, the national debt surpassed $38 trillion, and both are expected to continue rising. Significant uncertainty also surrounds tariff revenue itself. How much will be carved out for agriculture support? What happens if the U.S. Supreme Court determines that the Administration exceeded its authority in imposing tariffs and orders that revenue returned?
The American economy also remains fragile. Additional federal spending is likely to worsen inflation, not improve affordability. What is needed is not more government spending, but less.
Instead of rebates, policymakers should focus on maximizing the economic benefits of the tax reforms included in President Trump’s “One Big Beautiful Bill.” That means cutting spending, eliminating unnecessary regulations, advancing energy independence through permitting reform, and continuing to pursue tax relief.
“Remember, the tariffs are part of an economic policy. The policy has tax cuts. It has … spending cuts. It has energy production. It has regulatory reduction. And it has tariffs,” said former Ambassador Robert Lighthizer, who served as U.S. Trade Representative under President Trump.
The Tax Foundation notes that the “One Big Beautiful Bill” represents the sixth-largest tax cut in American history. Although further federal tax reforms are unlikely, Congress can still make progress through other pro-growth policies.
President Trump’s tariff policy remains one of the most controversial elements of his economic agenda. Critics argue that the very need for a $2,000 rebate shows that tariffs have failed. While the broader debate cannot be fully addressed here, the Administration would be wise to draw lessons from history.
Presidents Warren G. Harding and Calvin Coolidge faced a similar challenge. When Harding took office in 1921, the nation was in the “forgotten depression of 1920–1921.” Harding responded by limiting spending, cutting taxes, paying down the national debt, and maintaining protective tariffs through the Emergency Tariff Act of 1921 and the Fordney-McCumber Tariff Act.
What did Harding and Coolidge do with the revenue from those tariffs? They used it not for rebates or new spending, but to offset tax cuts and accelerate debt reduction.
“The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson’s income taxes, igniting that most dynamic of decades — the Roaring ’20s,” wrote Patrick J. Buchanan.
Throughout the 1920s, these policies helped reduce income tax rates, shrink federal spending, and pay down debt. The economy grew at a 4% annual rate, unemployment remained low, and the United States became the world’s industrial powerhouse—producing more than 40% of global manufactured goods, including half the world’s steel. This industrial strength would later fuel the arsenal that won World War II.
Harding and Coolidge’s success came not from tariffs alone but from a balanced economic strategy—combining tax reform, spending restraint, debt reduction, protectionism, and immigration limits. Coolidge himself credited both tariffs and immigration restrictions with strengthening wages and supporting economic stability. If President Trump seeks to revive the economy, he should look to Harding and Coolidge for guidance. A $2,000 tariff rebate should be avoided. At best it would provide only short-lived benefits—and at worst, it would worsen inflation and undermine long-term prosperity.
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