Tariffs have turned out to be quite the negotiating tool for President Donald Trump, who has used them as leverage to secure several major trade deals, including with Japan and the European Union. However, tariffs are also a tax, and Republican Senator Josh Hawley is effectively admitting as much with his proposed American Worker Rebate Act.
“Americans deserve a tax rebate after four years of Biden policies that have devastated families’ savings and livelihoods,” Hawley said. “Like President Trump proposed, my legislation would allow hard-working Americans to benefit from the wealth that Trump’s tariffs are returning to this country.”
His reference to Trump is that the president floated the idea of a rebate, too. “We’re thinking about a little rebate,” he said last week. “But the big thing we want to do is pay down debt. But we’re thinking about a rebate.”
As for the wealth Hawley mentioned, the U.S. collected a record $28 billion in tariff revenue in July, and year to date, tariffs have brought in $150 billion.
The bad news is that the money isn’t “returning to this country.” It was already here and is just going to the government.
American corporations are, so far, largely eating the tariffs — just as Trump explicitly told them to do instead of raising prices. That will be temporary, however, as corporations figure out what tariff rates will actually be (Trump has been famously loose with numbers) and how they will impact the bottom line. Many companies purchased large quantities of inventory in the first quarter, anticipating price increases on imported goods. Eventually, companies will pass along their higher costs in the form of higher prices.
It already started happening last month as inflation ticked back up to 2.7%. Procter & Gamble, for example, announced yesterday that it will increase prices. Others will follow.
Nevertheless, this morning brought good economic news. “The Commerce Department said U.S. gross domestic product — the value of all goods and services produced across the economy — rose at a seasonally and inflation adjusted 3.0% annual rate in the second quarter,” reports The Wall Street Journal. “The reading exceeded the 2.3% growth that economists surveyed by The Wall Street Journal expected.”
In other words, tariffs didn’t bring the recession Leftmedia talkingheads told us was coming.
Back to the Hawley tariff rebate, he’s proposing $600 for every adult and child in America, though that number will go down for higher earners. It could also go up for everyone if tariffs continue bringing in tons of money to the U.S. Treasury.
A $600 check — $2,400 for a family of four — sounds awesome! It’s about time we had some of our confiscated money returned to us! What’s not to like?
Well, to mitigate the incredible cost of government-imposed COVID lockdowns — job losses and total economic upheaval — Congress in 2020 authorized similar payments of $1,200 for adults and $500 for kids. Later that year, Hawley teamed up with fellow economic populist Bernie Sanders to advocate for a second round of direct payments to Americans. And then in 2021, Joe Biden and company did it a third time.
Pretty soon, we had inflation of 9.1%.
You could argue that what Hawley now proposes is a tax rebate, not a direct payment. However, Trump has repeatedly insisted that tariffs are not a tax on Americans but on foreign countries. So, then, which is it?
Regardless of what you call it, giving hundreds or even thousands of dollars to American families might provide companies with cover for raising prices. That’s inflation.
And another point: Trump mentioned wanting to “pay down the debt,” which has surpassed $37 trillion (the U.S. Treasury says it’s $36.7 trillion](https://www.nationalreview.com/corner/hawley-proposes-tariff-tax-rebate-checks-to-balance-out-the-cost-of-the-tariffs/)). A rebate is nice, “but the current deficit so far this year, as of the end of June, is $1.27 trillion,” notes National Review’s Jim Geraghty. “The Congressional Budget Office projected a $1.9 trillion deficit for this fiscal year. By no stretch of the imagination does the U.S. government have extra money lying around.”
Then again, anyone hoping for our elected representatives to display even a modicum of fiscal responsibility is deluded.
Rebates will no doubt be popular because everyone loves getting “free” money. Heck, even Democrats might cross the aisle to vote for this one. Whatever the merits, we’re about to find out if it has the votes.
