Trump’s efforts at salvaging his tariffs were met with skepticism by an economist, who sees an overall net negative impact on the economy.
- In a social media post over the weekend, Trump said a dividend of at least $2,000 per person would be paid to everyone, excluding high-income people.
- Consumers will use the extra income to buy more expensive imports, despite the tariffs, increasing the trade deficit.
- Bessent suggested the dividend could come in the form of tax decreases, which has been on the president’s agenda.
Close on the heels of Republicans suffering a setback in last week’s elections and amid the Supreme Court’s hearing on the tariff case, President Donald Trump vented his frustration on social media about opposition to the levies. Economist and gold Peter Schiff, however, took the president’s claims with a grain of salt.
The economist also weighed in on the rumors of a government shutdown deal and its implications for the financial assets.
The ‘Big,’ ‘Bigger’ Lie
In a post on X, Schiff said, “Trump claimed that the U.S. is now taking in trillions per year in tariffs. That’s a lie.” “He also claimed that tariff revenue is so large that soon our annual federal budget deficits will turn into surpluses, allowing us to pay down the national debt. That’s an even bigger lie.”
According to Schiff, if Congress passed the $2,000-per-person tariff, dividends would exceed tariff revenue. “Consumers will use the extra income to buy more expensive imports, despite the tariffs, increasing our trade deficit, which defeats the very purpose of the tariffs.”
He, however, did not rule out that some of the redistributed money would benefit some. The economist views it as harming others and having a negative overall impact on the economy.
Schiff’s reaction was in response to a Truth Social post by Trump on Sunday morning in which he called those opposing tariffs ‘fools.’ He also made tall claims about the economy, the stock market, and the fiscal situation. “We are now the Richest, Most Respected Country In the World; With Almost No Inflation, and A Record Stock Market Price; 401k’s are Highest EVER; We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion.”
The president also noted that the U.S. was now attracting record investment, with plants and factories going up across the country. He also said “a dividend of at least $2,000 a person” would be paid out to everyone, excluding high-income people. The Supreme Court, which heard the government’s arguments in the tariff case last week, questioned the president’s legitimacy to impose tariffs.
The stock market currently trades shy of its all-time high, although it remains volatile. The SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, are up 15% and 19%, respectively, year-to-date.
On Stocktwits, sentiment toward QQQ ETF was ‘bullish’ and that toward SPY ETF was ‘neutral’ after the tech ravage seen last week. The message volumes on both streams were ‘high.’
Dividends Via Tax Cuts?
Treasury Secretary Scott Bessent later suggested the dividend could be delivered through tax cuts. While appearing on ABC News’ ‘This Week’ aired on Sunday, Bessent said, “The $2,000 dividend could come in lots of forms, in lots of ways….You know, it could be just the tax decreases that we are seeing on the president’s agenda — no tax on tips, no tax on overtime, no tax on Social Security, Deductibility of auto loans.” “Those are substantial deductions that, you know, are being financed in the tax bill.”
Anti-Tariff Stance
Schiff hasn’t been a fan of Trump’s tariffs. In an earlier post, he said the Supreme Court “should see through the Trump team’s lie that tariffs aren’t about raising revenue.” He also dismissed the idea that trade will rebalance and tariff revenue will fall in the future as “highly speculative.” “Tariffs will likely destroy more domestic manufacturing than they create,” he said.
Govt. Shutdown Resolution Is Inflationary
Schiff said the end to the government shutdown that has now gone on for 40 days could mean “back to business as usual in Washington, D.C.” But he sees deficits and inflation rising and investing continuing to seek alternatives to the depreciating U.S. dollar.
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