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   The Best Way to Provide Relief Is to Repeal Tariffs, Not Offer Tariff   
   Rebate Checks   
   July 31, 20254 min readBy: Alex Durante   
      
   As US businesses and consumers face higher costs of goods due to the Trump   
   administration’s tariff policies, Senator Josh Hawley (R-MO) has introduced   
   the American Worker Rebate Act (AWRA) to rebate tariff   
   revenue to American households to provide financial relief. The proposal   
   takes a similar approach to the stimulus checks issued during the COVID-19   
   pandemic. However, a better way to provide relief would be to simply repeal   
   the tariffs altogether.   
   Details of the Proposal   
      
   The proposed tariff rebate checks would function similarly to the economic   
   impact payments, colloquially referred to as the COVID-19 stimulus checks,   
   passed in 2020 and 2021. The first round of those payments offered   
   households up to $1,200 per filer, with a smaller amount for qualifying   
   dependents, phasing out at 5 percent when incomes exceeded $75,000/$150,000   
   for single/joint filers.   
      
   The AWRA would apply the same thresholds and phaseout to the tariff rebate,   
   offering up to a $600 tax   
   credit per filer and qualifying dependent.   
      
   The rebate credit could be claimed in advance of filing and could also   
   increase if tariff revenue continues to climb. The tariffs have raised   
   about $150 billion in revenue so far this year, and will likely raise more   
   if the reciprocal tariffs go into effect on August 1 as scheduled.   
   Rebate Proposal Would Add to US Debt and Risk Inflation   
      
   While tariffs have undoubtedly raised costs for American firms and   
   consumers—since Americans and not foreigners ultimately pay the   
   tariff—rebating the revenue to consumers would be fiscally irresponsible   
   and also risk increasing inflation. Tariffs are a poor way to raise revenue   
   generally, but the revenue that is collected should be used for deficit   
   reduction rather than rebates.   
      
   Tariffs are not an efficient way to raise revenue because imports fall as   
   tariffs increase, eventually reducing the revenue that can be collected   
   when those rates become punitively high. Their revenue-raising potential   
   falls further when accounting for their negative impacts on economic   
   growth, as tariffs impose costs on businesses and consumers.   
      
   However, to the extent that tariffs do raise some revenue, with the US   
   running persistent deficits and the cost of servicing the debt becoming   
   more expensive in recent years due to high interest rates, it would be   
   prudential to use that revenue for deficit reduction rather than rebates.   
      
   The recently passed One Big Beautiful Bill Act (OBBBA) will also increase   
   deficits further over the next 10 years—by $3.8 trillion on a dynamic   
   basis, including interest costs.   
      
   The tariff rebate becomes even less defensible when considering that the   
   current economy does not present the need for additional economic stimulus.   
   GDP grew at 3 percent in the second quarter, and the unemployment rate in   
   June held steady at 4.1 percent. With inflation still hovering around 3   
   percent, a tariff rebate could risk pushing that number higher, although   
   this would depend on how the Federal Reserve responds. If the Federal   
   Reserve were to raise interest rates, this would offset the inflationary   
   impact of the tariff rebate but increase the interest costs for the   
   government even more.   
   Better Ways to Promote US Economic Growth   
      
   Replacing tariffs with spending cuts and other deficit-reducing tax   
   reforms, such as a broad-based consumption tax, would help address the   
   burgeoning US debt, while reforms like a flat individual income tax   
   combined with a distributed profits tax could boost both government coffers   
   and long-run wage growth. Policies that address our national debt and   
   promote US economic growth are available, if policymakers are willing.   
   Big Picture   
      
   Both the Trump administration and Senator Hawley have been reluctant to   
   acknowledge that the tariffs have harmed American households, and have   
   framed a rebate as sharing the “wealth” that the tariffs have allegedly   
   generated. This is misguided. Policymakers should recognize the benefits of   
   free trade and that tariffs are a poor way to raise government revenue. If   
   they want to give taxpayers relief from the tariffs, the most effective   
   solution is also the simplest: repeal the tariffs altogether.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)