That check wouldn’t be small, either, especially if Trump goes through with his threat to impose more tariffs later this year. Using data from the Urban-Brookings Tax Policy Center, I estimate that about 193 million people would be eligible to receive a rebate. Cotton’s staff further estimates that through mid-September about $38.9 billion would be available to send back. That’s about $200 a person, or $400 for a married couple.
Those checks could be even larger in the future. The Treasury estimates that tariff revenues will be about $47 billion higher this fiscal year over the last fiscal year before Trump levied any of his tariffs. Assuming that almost all of this increase is due to Trump’s tariffs, that would increase the rebate check amount to about $240, or $485 for a married couple.
These figures would go up significantly if Trump’s already announced future tariff hikes take effect. A new 15 percent tariff on $112 billion of Chinese imports took effect on Sept. 1. A 5 percent tariff hike on another $250 billion of Chinese goods is scheduled to take effect on Oct. 15, and a final 15 percent tariff on a further $160 billion of imports will be levied starting on Dec. 15. All told, these new tariffs could raise tariff revenue by a further $52.5 billion, more than doubling the amount of each rebate check to more than $1,000 for a married couple.
Cotton’s approach addresses both the economic and political challenges arising from Trump’s tariffs. Economically, giving the revenue back to average Americans offsets the expected rise in prices they will face as a result of the tariffs. Consumer spending, which was feared would decline in response to the price hikes, would now likely stay high: Why cut back in spending when you’re not losing any money? That would keep the economy strong.
The bill would also have a strong political impact. Americans would be told something they have longed to hear for years: We are all in this together. “America First” would become “Americans first,” and people would know their leadership has their backs and is fighting for their interests. Instead of tax cuts for big business for the rich and bailouts for the well-connected, Trump would be coming to the rescue of ordinary people.
The rebates would be particularly attractive to Trump’s working-class base. Take Wisconsin, which Trump unexpectedly won in 2016 because he dramatically outperformed Mitt Romney in its smaller, rural counties, grabbing more than 20 counties that Romney had lost. Most of those counties have a median household income below $49,000 a year, well below the Wisconsin and national median. A $1,000 check compensating them for the effects of a patriotic battle they wanted to fight anyway would look pretty good to them.
Trump would also put House Speaker Nancy Pelosi (D-Calif.) and the Democratic presidential contenders in a bind if he endorsed and pushed it. Democrats already are caught between free-traders and protectionists in their own coalition, so they can’t take a purist free-trade position and simply call for Trump to end his trade war with China. Trump could challenge them to put aside partisan rancor and do something good for everyone. And what would they say in response? That they’d rather use the increased tariff revenue to cut the deficit or put it toward more domestic programs? That’s a political loser, and they would know it.
Cotton is known to be close to the president. Trump should listen to his ally and make this idea his own. Doing that would turn the new tariff money into economic and electoral gold.