"It could kind of be a weird feedback loop where the tariff stimulus justifies passing on more tariff costs," Chris Motola, financial analyst at National Business Capital, a business loans marketplace and financial services company, told Fortune."
""start looking a lot better and less inflationary," he added."
"If consumers were "rational economic agents," they would put tariff-revenue checks into savings," he said. "But the odds are high that they'll turn around and feel like it's free money."
"Given that we have yet to unveil any official plan to that effect to be properly analyzed, these economists are speculating based on unsubstantiated assumptions about hypothetical policymaking."
Checks to Americans of $1,000–$2,000 funded by tariff revenues are being proposed as a form of relief. Such payments could offset some tariff-related cost pressures for households but would likely increase aggregate demand and contribute to inflation. Tariff-financed transfers could create a feedback loop if firms pass tariffs onto prices and policymakers use tariff receipts to justify further tariffs. Delayed inflation and jobs reports could change the perceived inflationary impact of the payments. Many consumers are likely to spend unexpected cash rather than save it, reinforcing short-term demand-driven inflation. No official plan has been unveiled.
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