Trump Unveils Plan for ‘External Revenue Service’
Donald Trump has launched a bold initiative to create an “External Revenue Service,” aimed at collecting tariffs from foreign countries. Announcing this plan on Truth Social, Trump drew parallels to the Internal Revenue Service (IRS), stating:
"We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share."
Trump plans to inaugurate this agency on January 20, 2025, signaling a significant shift from taxing citizens to focusing on foreign trade. He explained, “For far too long, we have relied on taxing our Great People using the IRS.” In his view, current trade deals benefit everyone except Americans.
The proposed plan requires Congressional approval, which may be facilitated by Republican majorities in both the House and the Senate. Trump’s External Revenue Service aims to alleviate Americans’ tax burdens by redirecting the financial responsibility to other countries. This strategy harkens back to earlier eras when tariffs were a primary source of government funding.
However, critics argue that tariffs essentially function as a tax on U.S. households and could trigger inflation. Some economists warn of potential price increases. Despite these concerns, Trump remains confident that foreign nations will bear the cost.
The Mechanics and Challenges of the External Revenue Service
The proposed External Revenue Service would be tasked with collecting:
- Tariffs
- Duties
- Revenues from international business dealings
Currently, the U.S. Customs and Border Protection (CBP), under the Department of Homeland Security, handles tariff collection. It remains unclear how the new agency would differ from or complement the CBP’s existing role. Speculation suggests it could be a rebranding effort or a more intense focus on maximizing tariff revenue.
Critics worry that this shake-up could impact American consumers. While tariffs may seem to target other countries, skeptics argue they often result in higher prices for U.S. shoppers. The mechanics of Trump’s proposed tariff system suggest possible retail price increases, especially if import costs rise significantly.
For the External Revenue Service to succeed as Trump envisions, it will need to:
- Navigate existing structures
- Find ways to actually reduce American tax burdens
- Secure skilled political maneuvering
- Gain Congressional support
Streamlining Government: Elon Musk and Vivek Ramaswamy, leading Trump’s Department of Government Efficiency (DOGE), are working to streamline processes and reduce regulations. Their task is to make the federal government more agile and aligned with Trump’s vision.
Economic and Political Reactions
Reactions to Trump’s proposal have been mixed across economic and political spheres:
Supporters:
- Steve Bannon: Sees tariffs as an opportunity to fund the government without burdening American taxpayers.
- Charles Benoit (trade attorney): Argues that Washington underestimates the potential of Trump’s tariff strategy and believes it could benefit American enterprise.
Critics:
- Kimberly Clausing (economist): Warns of potential backfire, pointing out that Customs and Border Protection already collects tariffs. She emphasizes that tariffs often act as hidden taxes on consumers.
- Senator Ron Wyden: Criticizes the proposal as a massive tax increase in disguise, arguing that American families and small businesses will bear the burden.
Economists raise concerns about inflation, asserting that tariffs rarely operate in isolation and could lead to price increases that outpace wage growth. This potential for higher consumer costs adds another layer of complexity to the debate.
As the discussion continues, Trump’s supporters envision tariffs as a path to economic resurgence, while critics caution about potential economic turbulence and increased costs for households. The nation awaits to see whether this bold move will invigorate the economy or present new challenges.
- Associated Press. Trump announces plans for ‘External Revenue Service’ to collect tariffs. AP News. 2025.
- Politico. Bannon suggests ‘external revenue service’ at POLITICO event. Politico. 2025.
- Congressional Research Service. Overview of the U.S. Tariff System. CRS Report. 2024.