US President Donald Trump announced Sunday that a portion of the revenue generated from tariffs will be distributed among American citizens, with those eligible set to receive $2,000 each. If the plan materializes, analysts believe it could be a potential catalyst for a massive crypto bull run.
Trump’s Tariff Dividend Explained
Tariff announcements by the Trump administration have rattled the crypto market over the past few months, triggering one of the largest liquidation events on October 10, when at least $19 billion got wiped out from the market within hours.
Despite growing criticism, the US president has constantly defended his tariff-related decisions, claiming they have made America the most respected country worldwide. He also says tariffs have enabled his government to introduce new monetary incentives, such as the dividend payment, which, according to The Kobeissi Letter, will benefit over 80% of the American adult population.
Additionally, Trump has revealed that the remaining tariff revenue will be used to pay the government debt, which currently stands at $37 trillion.
Impact of Trump’s Tariff Dividend on Crypto Markets
As mentioned, analysts expect cryptocurrencies to rally once the $2,000 stimulus packages reach US households. Crypto commentator CryptoRus anticipates an increase in liquidity, which could boost the prices of digital assets.
Other analysts are optimistic that Trump’s tariff dividend plan could have a similar effect on crypto markets as the 2020 COVID Stimulus, which propelled Bitcoin and top altcoins to higher levels within a few months.
Trump’s Tariff Dividend Plan Could Backfire
While Trump’s proposed stimulus checks could fuel a crypto rally, analysts at The Kobeissi Letter have offered a cautious view. They claim that the tariff dividend plan poses macroeconomic risks, such as a rise in inflation. That may not be far from the truth, considering inflation rose to 10% in 2020 when the US government gave stimulus packages to citizens.
If inflation begins to surge after the Trump administration issues tariff dividends, the Federal Reserve could take a hawkish approach to monetary policy, reducing the odds of additional interest rate cuts.
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