Reward or bribe: Trump’s stimulus cheques just another thought bubble

Another day, another counter-intuitive thought bubble from US President Donald Trump. This time he has revived the notion of giving every American a $US1000 ($1510) or $US2000 stimulus cheque – a gift, or more likely an early pre-midterm election bribe.

Let’s think of it as a cash Trump bump – a reward thanks to what he considers to be the windfall from his genius tariffs strategy.

Regardless of how it is branded, it constitutes a new definition of circular thinking. Trump imposes tariffs on imports that ultimately raise prices for US consumers, and now he is proposing to compensate them by handing over a cheque.

In other words, Trump is promising to solve a problem of his own creation. Can anyone else hear the ka-ching of inflation?

Trump has raised the spectre of a one-off dividend in the past. A few months ago, in unison with Elon Musk, he dangled the prospect of giving all Americans $US5000 when the duo was counting the theoretical savings to be made by the government’s Department of Government Efficiency.

DOGE had claimed it saved $US52 billion, but some who trawled through the details put the real figure at $US1.2 billion. So even if the cheques are theoretically in the mail as far as Trump is concerned, their would-be recipients would be wise not to spend them yet.

To be fair, the imposition of tariffs has already raised billions of dollars. There are numerous numbers thrown around about how much the US has collected with the beefed-up tariffs. US news website Axios reports that, as of June, the government had collected $US100 billion in customs revenue, and by the end of the calendar year this is projected to swell to $US400 billion.

The Congressional Budget Office said in August that the tariffs would lower deficits by a combined $US4 trillion over the next decade. But their full effect could be scuppered by a pending Supreme Court case that will test the legality of their imposition.

In the near term, the US is entering week two of its shutdown, and that means there’s no way of legislating any move to give effect to Trump’s “dividend”.

There is nothing new about the US economy, and plenty of others, including Australia, introducing a coalface stimulus as an emergency tool to pump-prime during emergencies. Many took this measure during the global financial crisis and again during the uncertain times of COVID.

Stimulus is the “break the glass” emergency fiscal measure to avoid economic catastrophe. And the US economy isn’t in that position at this point. The good news is that fears of the US economy being badly damaged by tariff-infused spikes in inflation have not come to pass – yet.

According to Morgan Stanley chief economist Michael Gapen, US consumers have been anaesthetised to the inflation pain because businesses have, for now, taken the bullet.

Rather than being a big tax on consumers, the tariffs have become a tax on businesses or, as Gapen describes it, a tax on capital.

He explains that in the second quarter of 2025, American companies largely absorbed the escalating cost of tariffs, offsetting higher non-labour costs with reductions in labour costs and profitability, rather than passing on the tariff costs directly to consumers.

That’s very different from what went down post-COVID, when companies hit with higher costs passed them on to consumers to usher in a period of rapid inflation. But whether US companies will continue to exercise the current level of pricing and profit constraints remains to be seen.

The US public will undoubtedly be on board with the idea of any kind of sweetener, and it will certainly keep MAGA voters happy – that is, unless the cheques turn out to be just another Trump thought bubble.

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