Trump launches $2000 tariff dividend plan, liquidity injection sparks new crypto bull market?

In November 2025, U.S. President Trump announced the implementation of the “Tariff Dividend” plan, promising to distribute at least $2,000 to eligible American citizens, covering approximately 220 million adults, with a total scale of $440 billion. Analysts generally believe that this massive fund could drive the cryptocurrency market into a new bull cycle through direct stimulation and liquidity spillover effects. However, officials from the Treasury Department revealed that the payments might be made via tax reductions rather than direct checks, which could weaken their immediate market impact. The policy resonates with the Federal Reserve’s rate cut cycle but may also reignite inflation pressures, bringing uncertainty to the market.

Mechanism and Coverage of the Tariff Dividend Policy

Trump explicitly outlined his tariff policy concept on the Truth Social platform, emphasizing that “those opposed to tariffs are fools,” and pointed out that the U.S. is becoming the “richest and most respected country in the world.” The core logic of the tariff dividend is to return the revenue from import tariffs—collected through cash or tax incentives—to the public, forming a closed loop of fiscal redistribution. According to Kobeissi Letter’s estimates, this plan excludes the top 15% income earners, covering about 220 million U.S. adults. At $2,000 per person, the total scale would reach $440 billion.

Compared to the stimulus plans during the COVID-19 pandemic in 2020-2021, this dividend plan fundamentally differs in funding sources. Pandemic stimulus funds mainly came from fiscal deficits and monetization, whereas the tariff dividend theoretically derives from income generated by trade policies. U.S. Treasury data shows that current monthly tariff revenue is about $60 billion, accounting for roughly 10% of the federal deficit. Achieving continuous dividends would require significantly increasing tariff rates or expanding the tax base. This design makes the policy self-financing but also risks retaliatory measures from trade partners.

Historical Stimulus and Cryptocurrency Market Correlation

Reviewing the impact of stimulus plans in 2020-2021 offers valuable insights into this policy’s potential effects. During the COVID-19 stimulus period, Bitcoin rose from a low of $3,800 to a peak of $69,000, an increase of over 1,700%; Ethereum surged from $90 to $4,800, up more than 5,200%. Successful altcoins like Solana and Avalanche achieved over 100x gains. These remarkable performances were closely linked to large liquidity injections, with the U.S. government rolling out approximately $5 trillion in stimulus measures.

According to Federal Reserve data, U.S. households accumulated about $2.5 trillion in excess savings during 2020-2021, with roughly 3-5% flowing into the crypto market—equivalent to $75-125 billion. If a similar proportion of the $440 billion dividend enters the crypto space, it could bring in an additional $13-22 billion. This scale accounts for about 0.4%-0.6% of the current total cryptocurrency market cap, enough to significantly influence prices. Considering the leverage effect in the crypto derivatives market, these incremental funds could amplify market impact several times over.

Implementation Scenarios and Market Impact

The actual impact of the tariff dividend on the crypto market depends on how the policy is implemented. Treasury Secretary Scott Bessent hinted that the $2,000 dividend might be delivered via tax reductions, including exemptions from tips tax, overtime tax, Social Security tax, and auto loan deductions. This indirect approach would have a much weaker stimulative effect than direct cash payments, as taxpayers may not perceive tax savings as disposable income.

If the policy is implemented as direct checks, consumer behavior studies suggest that 15-25% of recipients might allocate part of the funds to risk assets. Applying this to 220 million adults, this could generate $66-110 billion in investable capital. Given the popularity of cryptocurrencies among younger demographics (40% of 18-45-year-olds hold crypto), approximately 20% of this amount—around $13-22 billion—might flow into the crypto market, representing about 25% of the current total assets under management of Bitcoin spot ETFs. This could drive prices higher in the short term.

Macroeconomic Environment and Policy Risks

The biggest challenge for this policy is the potential to reignite inflation pressures. During 2021-2022, fiscal stimulus caused inflation to soar to 9.1%, a 40-year high, prompting the Fed to adopt aggressive rate hikes. Currently, U.S. inflation has fallen back to around 3%, still above the Fed’s 2% target. If the $440 billion dividend is fully implemented, combined with the Fed’s recent dovish rate cuts, it could undermine inflation control efforts.

From a debt sustainability perspective, Trump claimed that tariff revenues would be used to pay down the $37 trillion national debt. However, current monthly tariff income covers only about 10% of the deficit, limiting fiscal space. Large-scale dividend payments might necessitate substantial tariff hikes, which could escalate trade tensions and impact economic growth. In this macro environment, cryptocurrencies could serve a dual role: as an inflation hedge attracting capital inflows and as risk assets suppressed by tightening monetary policy.

Investor Strategies and Timing Recommendations

Based on different stages of policy development, professional investors might adopt layered positioning strategies. Before policy details are clarified, maintaining core holdings of Bitcoin and Ethereum at 15-20% of the portfolio is advisable. If direct payment plans are confirmed, focus on retail-sensitive altcoins like Solana and Avalanche, as well as assets related to retail trading platforms such as Robinhood and Coinbase.

Risk management should focus on two key indicators: U.S. core PCE inflation data and actual tariff revenue figures. If core PCE remains above 3%, the Fed might pause rate cuts or signal hawkishness, warranting reduced exposure to altcoins. Additionally, allocating about 20% of the investment cycle to cash or stablecoins can prepare for market volatility. Options market data show that implied volatility premiums for Bitcoin put options are rising relative to calls, indicating increased protection against downside risks by professional investors.

Conclusion

Trump’s tariff dividend plan marks another significant intersection of fiscal policy and the cryptocurrency market. While implementation details remain uncertain, the potential impact of large-scale fund distribution cannot be ignored. In the context of accelerating integration between traditional finance and the crypto ecosystem, this policy could serve as a test of cryptocurrencies’ inflation-hedging properties and spillover effects, as well as a practical scenario for the maturation of decentralized finance systems.