Could a $600 Tariff Rebate Help Fight Inflation? Experts Weigh In
Written by
T. Woods
Edited by
Jenna Klaverweiden
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Recently, Sen. Josh Hawley, R-M.O., introduced a bill to Congress that would consolidate revenue from President Donald Trump’s controversial tariffs levied against America’s trade partners and use that money to fund rebate checks to Americans. Called the “American Worker Rebate Act,” the bill proposes a minimum dispersal of $600 to American adults and dependent children (or $2,400 for a family of four).
As Trump’s tariffs and trade wars threaten to increase prices of many consumer products, and the ever-present threat of inflation hovers over all, could a $600 tariff rebate help Americans in these uncertain times? Could rebates for that amount stave off inflation?
Americans Are Worried
“Consumers are adjusting their habits in ways that could shape the retail economy for the rest of the year. They’re not just aware of tariffs; they’re actively changing how, when and what they buy in response,” per Vipin Porwal, founder and CEO of Smarty. In fact, a Smarty survey noted 62% of Americans are concerned about the increasing prices of necessary everyday goods.
For some families, $600 could certainly help that. In 2020, when the somewhat-similar Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump, most Americans received a one-time cash payment of $1,200. As the Peter G. Peterson Foundation has reported, these payments helped lower-income recipients cover necessary expenses during the early days of the pandemic, though only modestly.
$600 May Not Be Enough
The Peter G. Peterson Foundation also noted that the CARES payments — which were double the amount of Hawley’s $600 proposal — were expected to increase America’s economy by only about 0.6%. While that is something, it’s highly unlikely that this act would spur such growth, or combat the economic jitters noted by Porwal.
“Six hundred dollars is not enough, especially given that there will likely be more tariffs to come,” Amrita Bhasin, founder and CEO of Sotira, an AI-driven retail platform, recently told GOBankingRates.
Bhasin also has extreme doubts that a $600 check would help shoppers combat inflation. “Thousands of dollars would need to be provided to combat the percentage increase in prices. Even from this time last year to now, prices have gone up significantly,” Bhasin said.
Could It Make Inflation Worse?
Speaking of inflation, not only would the $600 rebate checks be unlikely to help lower-income Americans combat inflation, but it’s possible the extra spending that the $600 rebate creates could actually increase inflation itself.
In 2022, The Wall Street Journal reported on a Federal Reserve Bank of San Francisco study that indicated the CARES Act (as well as the American Rescue Plan) may have actually raised inflation by 3 percentage points by increasing consumer spending during a time when supply lines were disrupted by COVID-19. Similarly, every American having an extra $600 to spend, at a time when tariffs may begin to disrupt supply chains to America, could create a similar supply-demand issue.
While perhaps well meaning, it’s entirely possible that the American Worker Rebate Act might have a short-term positive impact for lower-income Americans, but in the long term, its impact could be negligible to negative.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
