Writing Checks to Millions of American Households: What Is Donald Trump's Mysterious Idea?

"There is so much money coming in, we are thinking about a small discount " for households, even if "what we mainly want to do is pay off the debt ," said the American president on July 25 at the White House.

Later, he changed his vocabulary and now prefers to speak of "dividend" - the word refers to the share of profits returned by a company to its shareholders.

"There could be a distribution or dividend for the people of our country . I would say for people with middle or low incomes," Donald Trump said on Sunday, for example.

Republican Senator Josh Hawley rushed to prepare a bill that would send checks for $600 per person - adult or dependent child.

Signature

The US president had already sent checks to tens of millions of Americans during his first term as part of the recovery efforts in the face of the Covid-19 pandemic.

While in the midst of the presidential campaign, the billionaire insisted that $1,200 checks issued in the spring of 2020 by the tax authorities bear his name, something never before seen in the United States for a sitting head of state.

The 79-year-old billionaire's new idea, however, raises many questions.

How to finance it?

The US public deficit has indeed widened further between October and June , compared to the same period a year earlier, despite an increase in revenue from customs duties which Donald Trump is hammering all of the United States' trading partners with.

Writing checks to households would widen this deficit, and consequently further increase the U.S. debt, which stood at more than $36.8 trillion on August 4.

So, what kind of cash flow is the American president talking about?

When he talks about the impact of his protectionist policy, Donald Trump mixes revenue from customs duties with investment promises made by several foreign economies.

"What I want"

In an interview with CNBC on Wednesday, when asked about the idea of a "dividend," the Republican leader cited the example of the huge investments promised by Japan and the European Union, comparing them to the bonuses paid when an athlete signs a new contract.

"I can do whatever I want with it ," he assured.

Problem: foreign leaders do not have the same reading at all.

The Japanese government, for example, assures that its investment promise will come in the form of loans and guarantees, certainly not a transfer of $550 billion in cash.

Finally, the American president is often accused by the Democratic opposition of misrepresenting the windfall from customs duties.

Donald Trump assures that customs duties are paid by foreign countries.

But many economists argue that it is American consumers who indirectly pay a large portion of these tariffs.

Customs duties are paid by importers, for example large retailers or factories that order spare parts from abroad.

These companies will pass on at least some of the extra cost to the final price of the goods, especially if they operate in low-margin sectors, such as retail.