WASHINGTON (AP) — President Donald Trump announced a "Warrior Dividend" during a televised address to the nation on Wednesday, but the payments are not a Christmas bonus derived from tariff revenues, as he suggested. Instead, the $1,776 payments to military personnel will come from a congressionally approved housing supplement funded through a tax cut extension bill signed into law in July. This clarification about the source of the payments was made by Trump’s administration on Thursday.
In his speech, Trump hinted that his “One Big Beautiful Bill Act” played a role in financing these payments while implying that tariffs significantly contributed to their funding. “We made a lot more money than anybody thought because of tariffs and the bill helped us along. Nobody deserves it more than our military,” he stated, characterizing the payout as a “dividend.” The Pentagon is distributing this money from a $2.9 billion military housing supplement associated with the act, aiming to enhance existing housing allowances for service members. The total cost of this initiative is projected to be around $2.6 billion.
The amount of the payments is symbolically linked to the upcoming 250th anniversary of the signing of the Declaration of Independence in 1776. This announcement comes in a context where Trump faces pressure to demonstrate efforts in addressing the rising costs of living, which remain high due to significant tariffs imposed on imports from various countries. Although Trump has vowed to reduce prices, accomplishing this has proven challenging; inflation soared to a four-decade high in June 2022 under President Joe Biden's administration, but persistent price increases have continued under Trump's tariffs.
In a related development, members of the U.S. Coast Guard will receive a similar one-time payment, dubbed “Devotion to Duty” payments, announced by the Department of Homeland Security on Thursday. These payments will total $2,000; however, unlike the “Warrior Dividend,” they will be taxable. Coast Guard members will effectively take home an amount approximating $1,776. The funding for these payments stems from legislation signed by Trump in November, which authorized government funding through January following a 43-day government shutdown.
This is not the first instance where Trump has discussed sending “dividends” to American voters—a tactic often employed by politicians. Over the past months, Trump has suggested that every American could receive a $2,000 dividend sourced from tariffs, seemingly as a strategy to bolster support for the tariffs, which he claims protect American industries and incentivize local manufacturing. However, an analysis by the Tax Foundation in November indicated that the promised $2,000 payments likely exceed the revenue generated by his tariffs, estimating potential revenue generation of only $158.4 billion during 2025 and an additional $207.5 billion in 2026—insufficient to sustain such dividend payouts while simultaneously reducing the budget deficit, which Trump claims his tariffs have been improving.
Earlier this year, amidst his administration's efforts to cut government expenditures, Trump even proposed the idea of distributing a DOGE dividend to citizens, although this initiative did not materialize. Skepticism regarding the tariff and DOGE dividends has been voiced by members of Trump’s own party and some administration officials. Critics caution that such payments could exacerbate inflation by stimulating increased consumer spending, recalling how direct payments from a pandemic relief package in 2021 sparked inflation concerns among Republican lawmakers.
