The ongoing debate over tariffs in the U.S. has heated up, and former economic adviser Kevin Hassett is making a strong case for their benefits. This week, Hassett addressed criticisms of the Trump administration’s tariff policies, asserting that many have misunderstood who truly pays for these tariffs. He emphasized, “The fact that countries move so much when Trump threatens tariffs says something about who’s bearing the tariff.”
Hassett’s remarks coincide with renewed discussions around President Trump’s proposal to distribute $2,000 checks funded by tariff revenues to U.S. taxpayers. The notion of rebate checks is gaining traction, particularly as the Trump administration touts the revenue generated from tariffs—over $95 billion according to the Congressional Budget Office for fiscal year 2023, which marks a dramatic increase from just $39 billion in 2017.
Trump himself has described this influx of tariff revenue as a “foreign-funded” dividend, intended for American citizens. He claims that since foreign exporters bear the brunt of the tariffs through forced price adjustments, this revenue should be returned to the American people. Some Republican senators have expressed apprehension over the plan’s affordability, with concerns about its impact on the federal deficit, which already stands at a staggering $1.7 trillion.
Sen. Ron Johnson has been vocal, labeling the rebate initiative as “unaffordable.” In contrast, others like Sen. Josh Hawley advocate for the idea, framing it as a strategic reward for American workers. Hawley’s introduction of legislation for smaller, tariff-backed rebates reflects a divide in thought about fiscal policy amid a politically charged landscape.
The Supreme Court’s involvement adds another layer of complexity. The court is currently considering the legality of using tariffs for national security, which, if ruled against, could complicate Trump’s tariff strategies and refund billions of dollars collected. Treasury Secretary Scott Bessent has acknowledged this potential fallout, stating that the ruling may delay or even cancel the rebate program.
Bessent did affirm that the Treasury possesses the necessary funds to implement the rebate if permitted. He mentioned ongoing examinations of disbursing these funds through various methods, suggesting flexibility in how checks may eventually be issued. Despite these administrative hurdles, Trump remains determined, recently vowing at a rally that his administration would ensure Americans benefit from the revenue accrued through tariffs.
In a wider economic context, the long-term effects of tariffs are under scrutiny. A U.S. International Trade Commission report revealed a more than 20% reduction in Chinese imports subject to tariffs, while modest job growth in manufacturing occurred between 2017 and 2019. However, the nuances of these statistics stir debate; higher prices for manufacturing components due to tariffs raise questions about the trade-offs involved.
Hassett contended that tariffs conveyed a critical message: unfair trade practices would no longer be accepted. His perspective suggests that the real conflict lies not in economic principles but in ideological battles, asserting that “the expert class was wrong again because they underestimated the U.S.’s bargaining power.” This sentiment resonates with Trump’s supporters, many of whom echoed Hassett’s critiques on social media.
The stakes of this tariff debate are significant. As the Supreme Court deliberates and Congress grapples with budgetary implications, the future trajectory of U.S. trade policy hangs in the balance. Tariff revenues, once a mere function of government income, are now morphing into pivotal components of campaign strategy and broader national discourse on trade.
In the end, as Hassett pointed out, “They said tariffs would crash the economy. Instead, they strengthened our hand.” The outcome of this discussion will undoubtedly shape upcoming fiscal policies and the U.S.’s positioning in the global economy.
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