US President Donald Trump has unveiled a sweeping “tariff dividend” program, pledging at least $2,000 per eligible American citizen, excluding high-income earners.
As this influx of new capital enters the market, experts believe it could serve as a powerful catalyst for the crypto sector, potentially sparking the next major bull run.
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What is Trump’s Tariff Dividend?
Trump’s tariffs have had a major impact on crypto markets. Announcements of increased tariffs have triggered crypto selloffs, as seen in April and again in October. However, the President has defended the decision in his latest post on Truth Social.
“People that are against Tariffs are FOOLS! We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price. 401k’s are Highest EVER,” Trump wrote.
He also highlighted new monetary incentives for American citizens, unveiling plans for a “dividend” payment.
“We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2,000 a person (not including high income people!) will be paid to everyone,” the President added.
The payment component has drawn significant market attention, as it signals a potential influx of new capital into the economy. According to The Kobeissi Letter, over 85% of American adults are expected to qualify for the dividend, resulting in more than $400 billion in distributed payments.
“Currently, there are ~220 million US adults who fit these income criteria. The top ~15% of earners would be excluded as ‘high income.’ 220 million x $2,000 = ~$440 BILLION handed out. And, the check could be larger than $2,000,” the post read.
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The Kobeissi Letter pointed out that in 2021, stimulus checks fueled a surge in consumer spending. So, how will that impact crypto assets this time? Most analysts believe the effect will be positive.
Impact on the Crypto Market
Cryptocurrency commentator CryptosRus predicts a massive liquidity surge, which could potentially boost markets, especially risk assets like cryptocurrencies. Several other analysts share this sentiment.
“Tariff revenue funds the $2,000 stimulus checks — not printed money. Tariffs bring production back -> government collects -> checks get paid. And he’s talking $20 trillion+ flowing back into the US economy. That’s real capital and not theory,” he posted.
Analysts are also drawing parallels to the COVID stimulus, which drove sharp gains in digital assets. Money Ape noted that at that time, Bitcoin surged 20-fold, Ethereum increased 50-fold, and some altcoins saw gains of over 100-fold. He suggested that the tariff dividend could set off a similar rally.
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“If even 20% flows into crypto that is $125 billion of fresh liquidity ready to explode. QE coming. ETFs approved. Pro crypto government in control. This is how the biggest bull run begins,” the analyst added.
Why Trump’s Tariff Dividend Could Backfire
Despite the optimism, Treasury Secretary Scott Bessent offered a more cautious view. He stated that the $2,000 “dividend” could come in the form of tax reductions rather than direct checks.
“The $2,000 dividend could come in lots of forms, in lots of ways. It could be just the tax decreases that we are seeing on the president’s agenda — no tax on tips, no tax on overtime, no tax on Social Security – deductibility on auto loans,” Bessent said.
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This means the dividend might not result in an immediate cash injection into the economy, and by extension, may not have an analyst-anticipated impact on crypto markets.
Moreover, even if Trump were to move forward with a direct payment, The Kobeissi Letter has raised red flags about the macroeconomic risks. It warned that during the last round of stimulus, inflation soared close to 10%. Today, inflation is back on the rise at 3%, and more stimulus could reignite price pressures.
“Trump also states that after this payment, tariff revenue will go toward paying US debt….Tariff revenue is barely accounting for ~10% of our monthly deficits,” the post highlighted.
The analysis also stressed that the Federal Reserve has shifted to an easing cycle. BeInCrypto reported that the central bank has slashed interest rates twice in the previous two months. Combined with new stimulus, this could reignite inflationary pressures.
“Stimulus payments will add fuel to the fire,” The Kobeissi Letter remarked.
Thus, markets are now awaiting official implementation details. In the coming time, it should become clearer whether this policy will translate into real economic stimulus — and if it could indeed ignite the next major bull run in the crypto market.
Source: https://beincrypto.com/trump-tariff-dividend-crypto-bull-run/