Except for Rand Paul, Senate Republicans have responded to President Trump’s schizophrenic tariff policy with a mix of acquiescence, mild pushback, and servile boosterism.
The latter is exemplified by Sen. Josh Hawley’s (R‑MO) “American Worker Rebate Act,” which would send checks of at least $600 to individuals and the same amount to each child. So, a family of four would receive at least $2,400. The amount drops when a filer’s adjusted gross income exceeds $75k (individuals), $112.5k (head of household), and $150,000 (joint return).
Hawley released the bill shortly after Trump told reporters the administration was considering giving Americans “rebates” from tariff revenue. It remains to be seen if the White House will push for the Hawley bill or something similar, but there are reasons to be hopeful it’ll go nowhere. Regardless, it’s a bad idea that reeks of cynical political opportunism.
It’s astounding that it needs to keep being said, but contrary to Trump’s claim, the exporting country does not pay the tariff. American importers literally pay it (legal incidence). The actual burden (economic incidence) depends on whether or how much the exporter is willing to lower the price of the good that the importer pays, and whether or how much the importer is willing to “eat” the tariff or pass it on to consumers.
Multiple studies of the first Trump administration’s trade war found that American consumers and businesses bore the tariffs. A so-called tariff rebate would be just another government tax and redistribution scheme, which Republicans used to bemoan. It would be redistributive as there’s no way to determine who bore what amount in import taxes, not to mention the Hawley plan’s income thresholds and checks for children.
It would be a handout, not a rebate.
The money for the checks would come out of the government’s general fund. It’s also astounding that it keeps needing to be pointed out that the federal government has a serious debt problem that isn’t getting better.
To the president’s credit, when asked about a rebate, he noted that “The big thing we want to do is pay down debt.” However, as Scott Lincicome explains, import taxes are an economically destructive “fantasy source of revenue.” Trump’s tariffs won’t even offset the budgetary cost of his One Big Beautiful Bill Act. Reducing the debt requires serious and sustained cuts in federal spending, which Trump has never supported, let alone attempted to pursue—quite the opposite.
Ditto, Hawley.
The irony is that there’s a chance that tariff rebates are coming, but not what Hawley has in mind.
The Constitution allows Congress to “lay and collect Taxes, Duties, Imposts, and Excises” and “regulate Commerce with foreign Nations.” In the previous century, Congress delegated authority to the executive branch to impose tariffs under certain conditions. The Trump White House has interpreted these delegations as giving the president a blank check to impose import taxes where, when, and however he wants.
There are currently strong legal challenges to Trump’s use of delegated authority to slap tariffs on imported goods from countries across the globe willy-nilly. Should they succeed, there may not be much money for sending checks.
That’s because, as this Politico article explains, the companies behind these challenges want their money back, and the Supreme Court may try to oblige:
“It’s entirely up to the [Supreme] Court to craft a remedy, and up to them how specific they want to be,” said Thomas Berry, director of constitutional studies at the free-market think tank Cato Institute, one of a number of organizations that submitted “friend of the court” briefs supporting the plaintiffs in the case.
Berry said the court may determine “some aspects of this are impossible to unwind,” but he and other trade experts interviewed for this article didn’t rule out the possibility that the court could order some form of repayment. While the lawsuit only seeks repayment of tariffs collected from the plaintiffs, five experts interviewed for this article said a ruling granting those damages would likely prompt a wave of similar legal challenges from other businesses and industry groups seeking reimbursement.
Uh oh.
Hawley says, “Americans deserve a tax rebate after four years of Biden policies that have devastated families’ savings and livelihoods.” But the politically expedient COVID-19 stimulus checks sent out by the Biden (and Trump) administration helped spark inflation, which families are still dealing with. Another round of checks and higher prices for tariffed goods won’t help that. Nor will it help small business owners back in Hawley’s state who could be put out of business because of the Trump trade war he supports.
