Trump stimulus package ‘to pump stock market higher’

Donald Trump has vowed to pay a $2,000 (£1,520) “tariff dividend” to American households in a radical stimulus package that could trigger a stock market boom.

The US president claimed he could reward households because America was making trillions of dollars from his trade war, which has led to sweeping tariffs being imposed on countries around the world.

A “dividend of at least $2,000” will be paid to every US citizen, Mr Trump declared on Sunday, excluding those classed as “high-income”.

The proposed stimulus is aimed at drumming up political support for his tariffs, though it is also likely to pump stock markets higher.

If Mr Trump follows through on his pledge to make $2,000 payments, analysts suggested it would turbocharge investment and help revive flagging crypto prices.

Joe Biden approved $1,400 stimulus payments for individual households during the pandemic, which were later credited with boosting growth and fuelling a retail investment boom.

The world’s biggest cryptocurrencies all rose following Mr Trump’s announcement on Sunday, as markets braced for a surge in trading.

Bitcoin was up by 1.3pc, while Ether jumped 3.4pc.

Chris Beauchamp, chief market analyst at IG, said crypto had “taken a battering, and this might help”.

He said the suggestion of new stimulus signalled “a willingness to boost the economy”. He added: “I think markets would take it as a positive given the worries about jobs and consumer spending.”

Mr Trump has championed crypto since returning to the White House, with his family’s portfolio of virtual currencies now worth more than its property empire.

Posting on his Truth Social platform, Mr Trump claimed his tariffs had turned the US into “the richest, most respected country in the world”.

He said: “People that are against tariffs are fools.”

The timing of the announcement is notable given that the US Supreme Court will soon decide on whether the president’s use of emergency powers to impose trade levies is legal.

The legality of Trump’s tariffs

The landmark hearing, which began in Washington earlier last week, is expected to decide the fate of more than $50bn in extra tariff revenue collected since the start of the year.

The case has been brought by a group of American companies, lawmakers and former US officials, who argue that the trade tariffs have damaged their businesses.

Earlier this year, the US Court of Appeals for the Federal Circuit ruled that it was unlawful for Mr Trump to use emergency powers to impose import taxes.

The Supreme Court justices last week challenged whether Mr Trump should have been able to use the International Emergency Economic Powers Act to introduce levies on trade partners. A ruling is expected to take several weeks.

Mr Trump has not appeared at the hearing but claimed that the case is “literally life or death for our country”.

Writing on Truth Social, the US president said the whole thing was “ridiculous”, questioning why he would not be “allowed to put a simple tariff on a foreign country, even for purposes of national security”.

He argued that this was “not what our great founders had in mind”.

Kenneth Rogoff, an American economist, said the tariff dividend was “clearly about trying to game the Supreme Court”, adding: “By telling Americans he was planning to hand out the money to everyone, he aims to foment populist furore.”

However, it is not the first time Mr Trump has raised the idea of tariff pay-outs to Americans. Over the summer, he floated the idea of sending rebate cheques out to Americans because “we have so much money coming in”.

On Sunday, Mr Trump said the US would “soon begin paying down our enormous debt”, adding that the tariffs had also resulted in “record investment in the USA, plants and factories going up all over the place”.

He said none of this would have happened without his tariffs.

The status of US stocks

It comes after US stocks last week recorded their worst week since Mr Trump unveiled his “Liberation Day” tariffs in April.

By Friday, more than $1tn had been wiped off the value of Wall Street’s most valuable tech companies, fuelled by concerns that the AI bubble is running out of steam.

The AI rout has also weighed on the crypto market. Bitcoin officially entered a bear market last week, dipping below $100,000 for the first time since June.

The recent crypto slump has been linked to a wider gloom in the US, which Mr Trump has been seeking to reverse.

Last week, the University of Michigan’s index revealed that American consumer sentiment on current economic conditions was at a record low.

Over the weekend, US housing director Bill Pulte said the administration was “working on” a plan for 50-year mortgages that could help younger people enter the housing market.