Explainer: $2,000 check for Americans floated by Trump

[Music] An influx of cash could be headed to millions of Americans. President Trump announced plans yesterday to offer $2,000 payments funded by tariff revenue to people outside high income brackets. Trump wrote on Truth Social that the US is taking in trillions of dollars and will soon begin paying down what he called the nation's enormous debt. He also highlighted what he described as record investment in new plants and factories nationwide. The plan would likely require congressional approval. Trump first raised the idea of a $2,000 tariff-funded dividend in early October. His latest announcement came just days after the Supreme Court heard arguments on the legality of his global tariff strategy. The president also said today that all leftover tariff revenue after $2,000 checks will be used to pay down national debt. And to talk more about this, joining us is Daniel Lay, the chief economist at Tresis and an international financial analyst, also the author of the book Freedom or Equality. So Daniel, always great to see you. So, can we talk about the order of payments here? Because you just heard uh President Trump says uh he's going to pay households and then he's going to pay down the national debt. Well, obviously I think that the plan is to first get the public accounts in order and then look for the opportunity to uh to to use part of these revenues to uh reduce uh the the challenges that some of the families in the United States are are facing. No. And obviously that $2,000 check is a is is a very good idea once you take into account that the the first and foremost objective has to be to uh control the national debt and and the national debt is obviously uh number one priority has to be reducing the deficit to uh sustainable level. I think that all those efforts are being uh taken and obviously if he comes if the the tariff revenues come to the figures that he has mentioned about a trillion dollars etc that would obviously be plenty to reduce the deficit to more than to by less than half of what it was and at the same time pay these these $2,000 checks. So Daniel, if this in fact happens where people get $2,000 checks, do you think that's going to be a boost for the US economy? >> Obviously, there's always a debate about these the the impact of these checks. Now we remember what happened with the with the stimulus checks of the COVID period. No. Um, I think that what they do is more to provide a certain level of relief to citizens that are either entering into too much debt or that have some financial difficulties. So, I personally don't care if people are going to use it for saving to put it in the stock market or to uh or to pay down debt. I think that those all of those are perfectly positive outcomes. No, I think that what is important is that once the deficit is under control and once the level of debt of the United States to GDP is declining and obviously if the economy is growing at a 3.8% and it brings down the deficit to half in dollar terms what it was obviously that would be the case then that would be a boost to the economy but we cannot expect a a massive increase in consumption. I I am uh always uh aware that a tremendous number of people are going to be using it to pay down credit card debt which is perfectly fine with me or or to invest in the stock market which is also perfectly fine with me. I think that what is important is that those revenues that are coming from the trade agreement are used at to the best uh uh the best possible solution. No. So on the one hand, if you think about this, bringing down the deficit means that the tax cuts that have been implemented can be increased. So that is a positive for citizens and their and their uh and their affordability. No, and number two, if they on top of that get a stimulus check, that can certainly be a relief. But I would consider it from that perspective. First, uh bringing down the deficit. Second, obviously looking at what to do with these with these enormous absolutely and much higher than expected to be fairly honest revenues coming from tariffs. >> So you raised the issue of stimulus checks. Um so how is this different from the stimulus checks that we got during the pandemic that actually fueled inflation? >> Oh, absolutely different. you. It's It's a great question because a lot of people say, "Oh, this is going to drive inflation higher." No, because the stimulus checks were paid with newly created money, with new deficit, with more money printing, more government spending, more debt. Okay? So, and this is something that is that is sharing with citizens an external revenue. So, this is not newly created money. This is not inflationary. Uh and and it's a huge difference here. Big difference to uh print money to provide a stimulus that obviously then backlashes and and give and and boomerangs into inflationary effects than to use revenues that are coming from abroad to to relieve uh those citizens that are in a in a more difficult position. >> So Daniel, can you explain a little bit to us a bit more? or I know you talked about this in the past, but who pays for tariffs? If American companies uh some of them do in fact pay for these tariffs and then the money is then given back to Americans, uh would some people argue that this is wealth redistribution? >> Uh well, it's not wealth redistribution. First, I think it's pretty evident that the tariffs are not paid by American consumers. I think it's it's very simple. If uh tariffs were paid by American consumers, no country in the world would have raised their eyes and and and and lifted their hands to reach a trade agreement. They would have just said, "Come on, let's go and let's send our products at a much higher price." It is pretty evident that global supply chains have enormous levels of overcapacity and that tariffs are being absorbed throughout the highest level of over capacity in those chains. However, even if you have some uh companies that have experience an increase in cost because of tariffs, then the the tariff is is not going into maintaining margins. is maybe eroding a little bit their margins, but it's good ultimately that some consumers receive the revenues from from tariffs. Ultimately, every single measure of uh stimulus plan or any every single measure of of payment to the disadvantaged is in is is a measure of redistribution. But this is not redistribution. American companies are doing phenomenally. American companies are not paying higher prices. You look at the ISM prices paid, it is in line with the last 12 months. The only thing that the United States truly needs to deal with in order to bring down inflation and the cost of living is to reduce government spending, which means reducing the amount of money in the system, reducing newly created money, which is what creates inflation, which is obviously not inflation is not the increase in prices. Inflation is the reduction in the purchasing power of the currency. So I think that ultimately the vast majority of the US economy benefits from receiving uh more revenues from tariffs, getting a level playing field in trade that allows American companies to trade in a more uh well logical and just way with the rest of the world. And if there is a control of the deficit and a control of the spending as I expect to happen in 2526 obviously to get a stimulus check of this of this. >> So Daniel how do you think American trading partners will feel about uh tariffs being given to US households and keeping in mind um these Americans that are getting the checks potentially uh you know are voters right? So, how how do you think uh our trading partners might feel about that? >> Well, let's think how the American people are thinking about the enormity of tariffs that the United States companies uh uh are suffering from the European Union that are then used to massively bloat government spending and entitlement spending in France or in Germany. Ultimately, we're talking about management of public finances and it is I I don't think that you can actually go to any of the US trade and partners from China to the European Union to the UK and think that this is an unfair way of using tariff revenues when the European Union is using its gigantic trade surplus with the United States to finance its enormous enormous level of government spending and of uh different social programs, the same as the UK. And nobody seems to be saying that Americans are paying for French pensions or that Americans are paying for UK uh roads. No, >> no question. Uh, Daniel, and you mentioned the stock market earlier, uh, like potentially people might invest in it. Uh, if they do, if they put the $2,000 into the stock market, do you think it could, uh, benefit um, the stock market in terms of it rising further? >> Yeah, absolutely it does. Absolutely it does. But more importantly, it allows a lot of people that are not invested in the in the in the US stock market to benefit from the improvement in profits and the improvement of uh the of the economy. I think that ultimately when you look at all of this, what what the Trump administration is trying to achieve is pretty much what the UK tried to do in in the late '7s, what the United States also did in the early 80s, which is to make uh the benefits of the strength of corporations, of the American economy, of all of the different aspects that generate wealth available to all citizens. if they want to invest in the stock market or in Bitcoin for that matter, it doesn't matter. It is always a positive and it's a much and it is a much better way of making the people understand that this is a positive for them than to uh finance enormous government stimulus packages like the Build Back Better or the Inflation Reduction Act that don't build and don't reduce inflation. Well, okay, Daniel, it's always uh enjoyable to hear your valuable insight. Thank you very much for speaking with us. >> Thank you very much, Don.