Is Trump’s $2,000 tariff dividend plan loopy?

It’s becoming increasingly taxing for Donald Trump to defend his tariff policy. His latest gambit is to float the prospect of a $2,000 rebate to Americans from the tens of billions that the federal government has collected in tariffs. But will this prove any more successful than his previous attempts to justify his loopy tariffs?

With the Supreme Court apparently poised to strike down his tariffs as a form of revenue collection designed to perform an end-run around Congress, Trump is scrambling. As usual, bravado prevails. On Sunday, he declared, “A dividend of at $2000 a person (not including high income people!) will be paid to everyone,” the president said on Truth Social.” Trump also dismissed his detractors as “FOOLS!” In his view, “We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place.”

What specific factories Trump meant was left unsaid. The truth is that a small coterie of tech firms is driving the American economy by building AI centers. To fund them, companies are relying on exotic debt-financed options. If that bubble pops, it could be 2008 all over again – or worse.

Speculation about a 1929 redux is on the rise. Former Securities and Exchange Commission official William A. Birdthistle notes that Trump has been “has been firing regulators and vigorously tearing down the guardrails that have kept our markets thriving for nine decades.” As he bellows about the efficacy of high tariffs, Trump himself seems intent on replicating the 1930 Smoot-Hawley tariff which ensured that America tumbled even deeper into the Great Depression. At least Smoot-Hawley was passed by Congress. Trump is doing it singlehandedly while Republican lawmakers cower in fear at the consequences.

The difficulty for Trump is that in promising an economic boom, he has highlighted his responsibility for inflation and unemployment. Voters, as the recent election showed, remain as unhappy about the economy as they were during the Biden era, when the White House also issued a steady stream of happy talk. In July 2021 Biden dismissed the notion that inflation would prove to be a persistent problem: “Our experts believe, and the data shows, that most of the price increases we’ve seen are expected to be temporary.”

Speaking at the American Business Forum in Miami this past Wednesday, Trump insisted that nothing less than an ”economic miracle” was taking place under his leadership. He also invoked his favorite adverb, tremendously, to state that “Americans are doing tremendously now.” A day later, he said, “I don’t want to hear about affordability” – a line that is certain to feature in Democratic campaign ads. Trump is also touting a new Walmart Thanksgiving meal as 25 percent cheaper than last year, but it also has six fewer items than the 2024 basket. The most recent consumer price index shows that grocery prices were up 2.7 percent in September compared to a year ago. So much for whipping inflation now.

Then there is the government shutdown. Disrupting air travel, terminating SNAP benefits and allowing health insurance premiums to soar even as Trump sends billions to Argentina is hardly a recipe for promoting economic growth. Some Republicans are getting antsy. “We need to deal with [health care] now because, number one, it’s the right thing to do, just morally,” New Jersey Congressman Jeff Van Drew said on Fox this past Wednesday.” “Number two, we’re going to get killed” in the 2026 midterm elections.

But Trump has other concerns. On Friday night, he threw another opulent gala event for his chums at Mar-a-Lago, complete with opera singers and ice sculptures. As Republican lawmakers fret about their futures, Trump continues to party on.