Trump Was Wrong About Tariffs Funding $1,776 ‘Warrior Dividend’ – Troops Already Set To Get Money | Luck
The “warrior dividend” announced by President Donald Trump during his televised address to the nation on Wednesday is not a Christmas bonus made possible by tariff revenue, as the president proposed.
Instead, the $1,776 in payments to troops comes from a congressionally approved housing allowance — money they were already supposed to receive — that was part of the Tax Cuts and Extensions Act signed into law in July. The Trump administration identified the source of the “dividend” payment on Thursday.
In his remarks, Trump referred to his “One Big Beautiful Bill Act” as playing a role, but indicated that the tariffs are largely responsible for payments already on the way to 1.45 million members of the military.
“We made a lot more money from tariffs than anyone thought, and the bill helped us. No one deserves it more than our military,” he said in announcing what he described as a “dividend.”
Trump has teased the idea of using his sweeping import tariffs to pay dividends to Americans since he introduced them in April. But those new payments are being made by the Pentagon out of a $2.9 billion military housing allowance that was part of Trump’s “One Big Beautiful Bill Act” to boost existing housing allowances, according to a senior administration official who spoke on condition of anonymity when describing the payments.
The payment amount is a nod to next year’s 250th anniversary of the signing of the Declaration of Independence in 1776. In total, the measure should cost $2.6 billion.
Trump’s comes as he faced pressure to show his announcement is working to address rising costs for Americans, with prices remaining stubbornly high as the president slapped double-digit tariffs on imports from nearly every country. Trump promised to lower prices but struggled to do so. Inflation reached a four-decade high in June 2022 during Joe Biden’s presidency and then began to decline. But inflation has remained elevated under Trump in part because of his tariffs.
Separately, members of the U.S. Coast Guard will receive a similar one-time payment, the Department of Homeland Security announced Thursday. The “Devotion to Duty” payments, approved by Minister Kristi Noem a day earlier, will be $2,000 because, unlike the “Warrior Dividend,” they are taxable. The amount Coast Guard members will take home will be close to $1,776.
The payments will be classified as “special duty,” according to the Coast Guard. They will be paid for with money in a measure Trump signed in November after a 43-day shutdown that funds the government through January.
It’s not the first time Trump has flaunted “dividends”
Sending money to voters is an outdated tool for politicians that Trump has repeatedly tried to use, including this year.
Trump has suggested for months that every American could get a $2,000 dividend from import taxes — an effort that appeared designed to try to bolster support for tariffs that the president says protect American industry and lure manufacturing back overseas.
But that particular liability appears to exceed the revenue generated by his tariffs, according to a November analysis by the right-leaning Tax Foundation. The analysis estimated that the $2,000 payments promised to taxpayers could total $279.8 billion to $606.8 billion, depending on how they were structured.
The analysis estimates Trump’s import taxes will generate a total of $158.4 billion in revenue in 2025 and another $207.5 billion in 2026. That’s not enough money to cover payments and reduce the budget deficit, which Trump has also claimed his tariffs do.
Earlier this year, as his Department of Government Efficiency cut back on the U.S. government and its workforce, Trump briefly proposed sending DOGE’s “dividend” back to American citizens.
Neither the tariff dividend nor the DOGE dividend have materialized, and members of Trump’s own party as well as officials in his administration have expressed some skepticism about the idea. There is also a risk that the payments promised by Trump could increase inflation as they are likely to spur more consumer spending. Republican lawmakers argued in 2021 that then-President Biden’s pandemic relief package — which included direct payments — helped fuel the spike in inflation.
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Associated Press writers Rebecca Santana, Konstantin Toropin and Lisa Mascaro contributed to this report.