Trump tariffs rake in billions: Where the money is headed

President Donald Trump has been celebrating the record-breaking tariff revenue the U.S. government is collecting after his administration significantly raised taxes on nearly all imported goods. “We have a lot of money coming in, much more money than the country’s ever seen,” Trump recently said. According to the Treasury Department, the government collected nearly $30 billion in tariff revenue last month alone. However, with so much money pouring in, the question remains — where is it all going?

Where is the money headed?

Trump has teased two potential uses for the funds — either applying it toward the national debt or redistributing it directly to Americans in the form of “tariff rebate checks.” Claimed the president, “The purpose of what I’m doing is primarily to pay down debt, which will happen in very large quantity. But I think there’s also a possibility that we’re taking in so much money that we may very well make a dividend to the people of America.”

How tariff revenue is used

All government revenue, whether from tariffs or regular taxes, goes into a general fund managed by the Treasury Department. Often referred to as “America’s checkbook,” this fund is used to cover government expenses such as tax refunds and interest on the national debt. While the nearly $30 billion in tariff revenue isn’t enough to eliminate the current $1.3 trillion budget deficit, it has helped reduce the need for government borrowing.

Rebate checks

Redistributing revenue in the form of checks to Americans, as Trump has proposed, would likely face obstacles. According to Ernie Tedeschi, director of economics at the Budget Lab at Yale, the plan could backfire. “They’re the wrong policy to pursue right now,” he said, warning that it could cause inflation to grow.

Risk of tariffs on Americans

While some businesses have managed to absorb the added costs of tariffs without raising prices, that hasn’t been the case across the board. Government inflation reports show rising prices for items like appliances, toys and consumer electronics — all categories sensitive to tariff changes. Major companies like Walmart and Procter & Gamble have already warned consumers to expect higher prices. “Tariffs are going to have a negative economic effect on the American economy,” Tedeschi told CNN. “That’s going to partly but not fully offset the amount of revenues that we raise from tariffs. Because if your economy is growing less than you thought, then, yeah, you raise this tariff revenue, but maybe you raise a little bit less in income taxes and payroll taxes as a result.”

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