The Simplest Solution Is the Best: Repeal Tariffs, Don’t Rebate Them 36

 in News / Tax Guide  tagged ariff rebate / Tariffs by (updated 82 days ago)

US businesses and consumers are feeling the pinch from higher costs on goods, largely due to the Trump administration’s tariff policies. In response, Senator Josh Hawley (R-MO) has proposed the American Worker Rebate Act (AWRA), a plan to send tariff revenue back to American households in the form of rebate checks.

While the idea of financial relief sounds good, this approach is far from the best solution. A more effective and fiscally responsible path would be to simply repeal the tariffs entirely.

How the Proposed Rebate Would Work

The AWRA’s tariff rebate checks are modeled after the stimulus checks issued during the COVID-19 pandemic. The proposal would offer a tax credit of up to $600 per filer and qualifying dependent, with the same income thresholds and phaseouts as the original stimulus payments. This means individuals making over $75,000 and joint filers earning over $150,000 would see their rebate reduced.

The checks could be claimed in advance of filing taxes, and the amount could even increase if tariff revenue continues to climb. This year alone, tariffs have already generated around $150 billion in revenue.

The Problem with Rebates: Debt and Inflation

Tariffs undoubtedly raise costs for American firms and consumers—not foreign countries—so the need for relief is real. However, rebating this revenue back to consumers is a fiscally irresponsible move that risks adding to inflation.

Tariffs are an inefficient way to raise government funds in the first place. As tariff rates rise, imports fall, ultimately reducing the revenue they generate. Their negative impact on economic growth further diminishes their revenue-raising potential.

Any revenue that is collected from tariffs should be used to reduce the national debt, which has been growing rapidly. With the US already running persistent deficits and the cost of servicing the debt rising due to high interest rates, it’s imprudent to give this revenue away. This is especially true given that the recently passed “One Big Beautiful Bill Act” is projected to add another $3.8 trillion to the deficit over the next decade.

Furthermore, the current economic climate doesn’t call for additional stimulus. The US economy is growing and unemployment is low. With inflation still a concern, a tariff rebate could push prices even higher. While the Federal Reserve could raise interest rates to counteract this, it would only make the government’s debt even more expensive to manage

The Best Way Forward: Free Trade and Growth

Instead of creating a complex and potentially harmful rebate system, policymakers should focus on policies that promote long-term economic health. The most effective way to help American households is to address the root cause of the problem: the tariffs themselves.

The idea that tariffs create “wealth” for the country is misguided. Policymakers should acknowledge the benefits of free trade and the fact that tariffs are a poor way to raise government revenue.

If the goal is to give taxpayers relief from the burden of tariffs, the solution is simple and direct: repeal the tariffs altogether. This would lower costs for everyone, boost economic growth, and avoid the risks of increased debt and inflation.

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