$2,000 Tariff Checks Are a Good Idea Badly Planned

President Donald Trump is promoting the idea of sending a $2,000 check to most Americans funded by revenues brought by his tariffs on imports. The scheme has received a frosty reception from Trump’s fellow Republicans in Congress and economists alike, and they are unlikely to happen. If the White House really wants to ease the burden that tariffs have created for on lower-income households, then it might want to look to our neighbor to the north, Canada, which has become a global leader in making consumption taxes more equitable.

Tariffs, which total around $200 billion this year through October, are essentially a regressive consumption tax. The duties are paid by importers, which then try to pass their added costs to their customers, which typically increases the prices of imported goods paid by consumers. That’s the tax. Even when the prices paid are the same across all consumers, the loss of purchasing power is greatest for those with the least income. Because lower-income households already spend a higher share of their income, they must spend an even greater percentage of their incomes when prices rise due to tariffs.