Recently, President Donald Trump suggested using tariff revenue to send rebate checks to Americans. He promoted the idea as a means of compensating “people of a certain income level,” asserting that the levies are generating “so much money” for the United States. Trump also pointed out that prior to the income tax’s permanent implementation in 1913, tariffs were the main source of funding for the federal government. Although importers are technically responsible for paying tariffs on imported goods, consumers frequently pay more as a result.
Although the concept garnered interest, investor Kevin O’Leary strongly objected.
Kevin O’Leary strongly objects to Trump’s tariff rebate plan
“No,” O’Leary said. “I tell you the idea I like — and I think every taxpayer likes better than this idea — use any excess capital to reduce the national debt.”
The chairman of O’Leary Ventures, Kevin O’Leary, cautioned that increasing debt is a long-term risk, especially since borrowing becomes more costly due to rising interest rates. He underlined that a sizable amount of America’s debt is held by foreign companies, which makes the problem even more urgent. “Let’s use any excess cash anywhere to get to that balanced budget and start paying down that debt,” he said.
O’Leary hinted that the Republican leadership might be discussing internally how to deal with tariff income. He went on to say, “within the administration itself, this is a big debate going on,” citing mounting pressure to give fiscal responsibility top priority.
Stability would come from debt reduction
Even though he backed initiatives to boost competitiveness and reduce tax rates, O’Leary warned that doing so at the expense of an estimated $3 trillion in new debt necessitates a closer examination of the nation’s balance sheet. He also proposed using domestic energy resources owned by the government as an alternate source of income. “We could open up the NIR in Alaska and put a tariff on that oil like they do in Norway and just use it all for debt reduction,” he went on to say.
O’Leary emphasized that long-term economic stability depends on debt reduction. He cautioned that the cost of debt servicing, which is ultimately paid for by taxpayers, will rise as long as interest rates remain high.
Trump’s proposal for a rebate gives the GOP’s ongoing fiscal policy discussion a fresh perspective. However, O’Leary’s response highlights a growing concern for both retirees and investors: how to allocate government revenue at a time when the U.S. debt is on the verge of reaching all-time highs.
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