Cryptocurrency prices nudged higher after U.S. President Donald Trump announced a direct tariff dividend of “at least” $2,000 to most Americans.
In a recent post, Trump stated that the U.S. is generating “trillions of dollars” in tariffs, which will help reduce the national debt and finance the dividend.
“A dividend of at least $2000 per person (excluding high-income earners!) will be paid to everyone,” Trump wrote. This announcement contributed to rising cryptocurrency prices.
Bitcoin climbed 1.93% over the past 24 hours, trading above $103,000. Ether rose 4.75% to exceed $3,500, while Solana gained 2.49% to surpass $160. The CoinDesk 20 index increased by more than 1.5%.
This modest rally occurs amid a broader weekly slump that saw the CD20 index drop nearly 15% before beginning to recover. Bitcoin remains down 5.7% for the week, while Ether is down 7.5%.
Trader reactions suggest they may be anticipating higher consumer spending and crypto market inflows once these funds reach recipients.
Key considerations
While the news of the tariff dividend has excited the market, it’s crucial to note that payment is unlikely to occur immediately.
The President cannot authorize or execute this payment alone, as federal spending decisions lie with Congress. Any plan to distribute funds from tariffs requires legislative approval, as noted by Andy Constan, CEO and CIO of Damped Spring Advisors.
Due to ongoing debates and legal challenges surrounding Trump’s tariffs, the prospect of swift Congressional action appears uncertain.
Meanwhile, tax and budget experts have highlighted that the revenue from tariffs thus far is insufficient to cover payments to the many eligible recipients.
“The President just proposed a $2,000 tariff “dividend” for each person, excluding high-income earners. If the cutoff is $100,000, 150 million adults would qualify, costing nearly $300 billion. If children qualify, that figure would rise. However, new tariffs have generated only $120 billion so far,” remarked Erica York, vice president of Federal Tax Policy.
She further noted that considering the full budget impact of tariffs, the financial outlook becomes less favorable.
Every dollar raised through tariff revenue effectively offsets about 24 cents of income and payroll tax collections due to broader economic effects on taxable income. After adjustments, the net revenue generated by tariffs stands at approximately $90 billion—well below the $300 billion proposed for the rebate program, according to York.
This gap indicates that Trump may face challenges funding the $2,000 dividend solely from tariff revenues.
15:53 UTC: Includes a section on potential legislative and budgetary challenges to Trump’s plan.
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