How Will Trump’s External Revenue Service Plan Shake Up America?

Button with "Trump" on American flag.

President-elect Donald Trump announces plans to create an “External Revenue Service” to collect tariffs and duties from foreign sources, sparking economic debates.

At a Glance

  • Trump plans to establish an “External Revenue Service” on January 20, 2025.
  • The new agency aims to collect tariffs and duties from foreign sources.
  • Proposed tariffs include 10% increase on Chinese imports, 25% on Canadian and Mexican goods.
  • Economists warn of potential negative impacts on U.S. consumers and businesses.
  • Trump considers declaring a national economic emergency to implement new tariffs.

Trump’s Vision for a New Revenue Collection Agency

In a bold announcement, President-elect Donald Trump has unveiled plans to create an “External Revenue Service” (ERS) upon his second inauguration on January 20, 2025. This new agency is set to take over the responsibilities of collecting tariffs and duties from foreign sources, a task currently handled by U.S. Customs and Border Protection.

Trump’s proposal stems from his critique of the current reliance on the Internal Revenue Service (IRS) for domestic taxation. The president-elect argues that weak trade agreements have benefited the world at the expense of the American economy, necessitating a shift in revenue collection strategies.

Proposed Tariff Increases and Economic Implications

As part of the ERS initiative, Trump is considering significant tariff increases. The plan includes a 10% hike on imports from China and substantial 25% fees on products from Canada and Mexico. These proposed changes have sparked discussions among economists and policymakers about their potential impact on the U.S. economy and consumers.

Trump’s administration argues that this new approach will ensure foreign entities pay their fair share. However, economists have expressed concerns that higher tariffs could lead to increased costs for American consumers and potentially trigger retaliatory measures from other countries.

Legal and Economic Challenges

While federal law allows presidents to adjust tariffs for national security reasons or to address unfair trade practices, the broad-based nature of Trump’s proposed tariffs has raised questions about their feasibility and potential economic consequences. Experts argue that U.S. importers, not foreign firms, ultimately bear the cost of tariffs, which could negatively impact the domestic economy.

It’s worth noting that the Biden administration has collected more tariff revenue than the Trump administration, with $144 billion compared to $89.1 billion, primarily from tariffs on Chinese goods. This suggests that the impact of tariffs on government revenue is already significant under current policies.

Implementation and Future Outlook

Trump plans to sign executive orders to facilitate the creation of the External Revenue Service and potentially declare a national economic emergency to expedite the imposition of new tariffs. These actions are part of his broader campaign platform to offset tax cuts and support fiscal spending plans.

“Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves. It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources. We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!” – Donald Trump

As the debate continues, economists and policymakers will closely monitor the development and potential implementation of the External Revenue Service, assessing its implications for international trade relations, domestic economic growth, and the financial well-being of American consumers and businesses.

Sources:

  1. Trump says he’ll create ‘External Revenue Service’ to collect tariffs, foreign revenue
  2. Trump says he’ll create “External Revenue Service” to collect tariffs
  3. Trump’s ‘External Revenue Service’ will collect from importers, not ‘foreign sources’