President-elect Donald Trump plans to create an External Revenue Service to collect tariffs, duties and revenues from foreign sources, he said via social media on Tuesday.
“I am today announcing that I will create the External Revenue Service to collect our tariffs, duties, and all revenue that comes from foreign sources,” Trump said on Truth Social. “We will begin charging those that make money off of us with trade, and they will start paying, finally, their fair share.”
The new entity will launch on Jan. 20, the same day as his presidential inauguration, he said.
Currently, the U.S. Customs and Border Protection (CBP) collects foreign revenues and enforces U.S. trade laws and regulations for 47 federal agencies. Trump hasn’t said whether the CBP or the IRS would cease collecting foreign revenue under his plan.
Some experts said the new agency, in and of itself, likely wouldn’t have a dramatic effect on U.S. consumers.
Establishing an External Revenue Service “would do nothing to change the negative impact tariffs would have on exporters, from likely retaliation, or on consumers, from higher prices, other than the fact that tariff payments may be remitted to this new agency instead of the U.S. CBP,” said Garrett Watson, a senior policy analyst and modeling manager at the Tax Foundation, a nonpartisan, nonprofit tax research organization.
Meanwhile, some experts say that creating the new entity would undermine Trump’s promise to cut federal spending. Trump has also said he plans to create the Department of Government Efficiency, along with allies Elon Musk and Vivek Ramaswamy, to help cut regulations and spending within the federal government.
Still, with a Republican-controlled Congress, Trump’s ability to create the External Revenue Service is well within reach. The Constitution grants Congress the power to regulate commerce with foreign nations. Experts say Trump likely would establish the new entity by signing an executive order on his first day in office.
“It’s not entirely clear how feasible this is, as creating entirely new agencies typically requires Congressional assent,” Watson said. “However, it could be a part of the Treasury and perhaps could fit under existing law.”
More tariffs likely are coming
Whatever happens with the External Revenue Service, or ERS, it’s likely the second Trump term will bring new tariffs. Tariffs are like a tax imposed on goods imported from other countries. U.S. companies pay tariffs to the U.S. government on the products they import, and often those higher costs are passed along to consumers.
During his presidential campaign, Trump promised to impose tariffs of 10 to 20 percent on imports, and at least 60 percent on all China imports. He also proposed replacing income taxes with tariffs.
However, many experts say the proposed tariffs would have a harmful effect on the American economy, and their implementation could reduce trade.
After Trump announced his proposal to establish the External Revenue Service, the announcement was met with backlash and opposition. Senator Ron Wyden of Oregon, a top Democrat, released a statement opposing the creation of the External Revenue Service.
“No amount of silly rebranding will hide the fact that Trump is planning a multi-trillion-dollar tax hike on American families and small businesses to pay for another round of tax handouts to the rich,” Wyden said.
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