Trump Proposes 'Livelihood Coupons' Funded by Tariff Revenues... Populism Controversy Erupts [AK Radio]

$100 Billion in U.S. Tariff Revenue in the First Half of the Year
$600 Tariff Rebate per American Citizen

The U.S. political scene is in turmoil after President Donald Trump announced that a portion of tariff revenues would be distributed to American citizens in cash. This policy, which comes as countries including South Korea have promised large-scale investments in the U.S. following tariff negotiations, is sparking fierce political controversy and criticism as a form of "predatory economics."

At a recent press conference, President Trump announced, "In exchange for lowering reciprocal tariffs to 15%, we have secured large-scale investment pledges from various countries." South Korea pledged $350 billion, Japan $550 billion, and the European Union (EU) $750 billion in investments to the United States. Amid these developments, President Trump's announcement to distribute part of the tariff revenue to Americans has ignited controversy. The plan is to provide up to $600 per person?approximately 830,000 Korean won?in the form of a "tariff rebate." This amount is similar to the relief payments distributed during the COVID-19 pandemic under the Biden administration.

In just the first half of this year, U.S. tariff revenues reached $100 billion, equivalent to 134 trillion Korean won. With the addition of second-half revenues, the annual total is expected to exceed $300 billion. Since tariffs are applied at varying rates from 15% to 25% by country, and separately by product, the U.S. government's tariff revenue is projected to keep increasing through the end of the year. Combined with the enormous investment pledges from other countries, total revenues are expected to far surpass $300 billion.

On July 29 (local time), Republican Senator Josh Hawley introduced a bill to distribute tariff rebates to all citizens, aiming to "reduce the burden of price increases caused by tariffs." The Trump administration and the Republican Party stated that most of the tariff revenue would be used to pay down U.S. government debt, with the remaining funds distributed as "livelihood coupons" of up to $600 per person for Americans.

Initially, President Trump announced that he would implement this policy via executive order without submitting it to Congress. However, due to the large amount involved and numerous procedural issues, the approach was changed to introduce a bill through the Republican Party. Since both the Senate and House are currently controlled by Republicans, the bill can be pushed through, but significant political controversy is anticipated.

AFP Yonhap News

The Democratic Party is strongly opposing this policy. They are particularly critical, pointing out that the Republican Party had harshly criticized COVID-19 relief payments during the Biden administration, asking, "Isn't this a reversal of your position?" At the time, Republicans argued that "relief payments would increase inflation and make things worse." Now, however, they are proposing a tariff rebate bill for the same amount.

With concerns over inflation spreading, the Federal Reserve has also decided to keep interest rates unchanged. Despite intense pressure from President Trump to lower rates, the announcement of $600 payments to all citizens led to the decision to freeze rates. Not only this month, but forecasts suggest that a rate cut will be difficult even in September. Since previous COVID-19 relief payments under the Biden administration were estimated to have increased inflation by about 2.6%, there are concerns that distributing a similar amount again could negatively impact the U.S. economy.

Meanwhile, one of the main reasons for strong backlash from the Democratic Party and the political and business communities is the upcoming U.S. midterm elections in November next year. Since the tariff rebate bill has been introduced, there is a possibility that, if passed by the end of the year or early next year, payments could be made before the elections. This has led to criticism that it is essentially a form of pre-election campaigning. The Democratic Party is harshly criticizing it as "the very definition of populist policy."

What makes this policy even more noteworthy is that its impact extends beyond U.S. domestic affairs. Ultimately, it means that Americans would be receiving pocket money funded by tariffs and investments paid by foreign countries, including South Korea. A bigger concern is that if this bill passes and tariff rebates become established as a form of livelihood support in the U.S., future administrations?regardless of political party?may continue waging tariff wars against other countries. The most troubling point is that this could create a kind of predatory economic system, where money collected from other countries is distributed to American citizens.

On the 30th of last month, activists from the Peace Sovereignty Action and Beyond Peace held a protest in front of the U.S. Embassy in Jongno-gu, Seoul, condemning the Trump tariff-security package exploitation. Photo by Yonhap News

Once such cash payments begin, they are likely to become institutionalized. This means that future administrations, especially ahead of elections, would be compelled to implement similar cash distribution policies, requiring U.S. tariff revenues to remain consistently high and leading to repeated demands for tariff negotiations with other countries.

Already, not only South Korea but also Japan, the European Union, and many other countries around the world have pledged substantial investments to the U.S., almost as if making tributes. If this situation continues, there are concerns that it could ultimately harm the U.S. economy as well. International trade itself could contract, and as export and import volumes to and from the U.S. decrease, the U.S. could also suffer losses.

The very concept of a tariff rebate is also controversial. Originally, tariff rebates were intended as subsidies returned to companies to protect key domestic industries. There are questions as to whether it is appropriate for the government to distribute this money to citizens as a form of livelihood support. Since the U.S. government would be using funds collected from both foreign and domestic companies as a welfare policy for its citizens, critics argue that it amounts to collecting money from businesses to distribute to the public.

President Trump's tariff rebate policy is being evaluated as a major shift that could shake the entire international trade order, far beyond a simple U.S. domestic issue. How this policy unfolds and how the international community responds are expected to be key variables that will determine the future direction of the global economy.