The Trump administration's proposal to issue a $2,000 "tariff dividend" tax rebate to Americans is meeting with widespread skepticism, particularly as consumers face increasing prices during the holiday shopping season.
President Donald Trump has repeatedly mentioned the idea in recent months, suggesting that the funds would come from revenue generated by his administration's global reciprocal tariff policy. However, the concept lacks a detailed plan, and independent studies indicate that the revenue from US tariff policies would be insufficient to fund such broad rebates.
For instance, the non-partisan Tax Foundation estimates that these rebates could cost the US government between $279.8 billion and $606.8 billion, depending on the recipient group. This figure significantly exceeds the $158.4 billion in tariff revenue projected for 2025.
President Donald Trump signs an executive order at the White House on 31/7. Photo: Reuters |
President Donald Trump signs an executive order at the White House on 31/7. Photo: Reuters
Economists are also concerned that such rebates could fuel inflation, mirroring the effects seen with Covid-19 era stimulus payments. The idea has not garnered enthusiastic support in Congress, even among some Republicans.
"I think this idea needs more clarity," Republican Representative Ryan Zinke of Montana told Politico. "We are $36-37 trillion in debt. To me, this bus is full. If you want to add this, you have to cut something else."
Many Americans believe that even if they received the money, it would offer little relief, especially given the noticeable decline in purchasing power during the year-end holiday shopping for Thanksgiving, Christmas, and New Year.
Ruby and Nathaniel Jumper, a couple living in Mercedes, Texas, started saving money in January to move to Tennessee for better job opportunities and a larger home. However, unexpected increases in bills and food prices have made their plan increasingly distant.
"It's really hard," Ruby said. The couple is closely following the Washington discussion about the $2,000 tax rebate for next year.
They noted a significant change in their holiday spending habits: "Every year, we buy three to four gifts for our children for the year-end holiday season. This year, each child only gets one gift."
Andrei Thies from Milwaukee echoed these sentiments, stating, "Prices are terribly expensive. Everything is beyond imagination." She also reported buying fewer Christmas gifts for her family this year.
In downtown New Orleans, Shawnell and Chris Thiel left the Riverwalk Outlets with just a few small items, including donuts for their children, lamenting the universal rise in prices.
"The smallest toys last year were $10, but they have now doubled," said Chris, 46. "We will have to buy less. The situation does not look good."
Recent polls indicate that most adult Americans plan to spend less this year-end holiday season compared to last year, primarily due to rising goods prices.
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Shawnell and Chris Thiel with their three children at a shopping mall in New Orleans, US. Photo: USA Today |
Shawnell and Chris Thiel with their three children at a shopping mall in New Orleans, US. Photo: USA Today
Analysts and retailers are aware of this trend and are relying on high-income customers to drive holiday sales.
"High-income shoppers will likely account for a disproportionate share of year-end sales, contributing significantly to growth compared to 2024," noted Jennifer Timmerman, a senior expert at Wells Fargo Investment Institute.
Timmerman added that lower-income shoppers will actively seek promotions and utilize buy now, pay later options to manage their holiday expenses.
Chris Thiel had heard about Trump's $2,000 rebate plan, acknowledging it could provide some assistance, but doubted it would bring substantial change to his family's life.
"No matter how much money we get, bills increase proportionally. It's a large sum, but it will disappear as quickly as it arrives," the couple stated.
In Milwaukee, Laura Creswell was not optimistic about receiving any rebates. However, if she did, she intended to use the money to establish an emergency fund.
"My savings are almost depleted. A little financial cushion would make things easier," she said. "Many things, food, meat, eggs, everything is much more expensive. I try to save all year, but do not keep much."
Ryan McDonald, living in New Jersey, concluded, "Everything is more expensive. I would certainly welcome $2,000, but this is just a vicious cycle, bringing us back to square one. I wish Mr. Trump had not imposed import tariffs in the first place."
Duc Trung (According to USA Today, Yahoo News, AP)
