President-elect Donald Trump has announced he will create a new “External Revenue Service” to collect income on goods from other countries when he takes power next week.
Newsweek has contacted the Trump transition team for comment via email.
Why It Matters
During his 2024 presidential campaign, Trump proposed the idea of minimum tariffs of 10 to 20 percent on all imported goods, and 60 percent or higher on goods from China. He has been keen to see tariffs replace income taxes as a core means of income for the federal government.
According to the White House, existing import duties on goods raised $80 billion in 2023, around 2 percent of the $4.44 trillion in total federal tax revenue.
What To Know
This week, Trump announced his intention to create the new federal department on Truth Social, writing: “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.”
But experts have told Newsweek that such a service essentially already exists, and is run by the U.S. Customs and Border Protection (CBP), which is overseen by the Department of Homeland Security.
“The creation of this new agency seems largely unnecessary because existing government agencies already perform these functions,” Michael Fahey, CEO and founder of Fahey Communications a national PR firm specializing in political campaigns, media relations, and crisis communications, told Newsweek.
Some have raised issue with the creation of the service, saying that the tariff will be paid by the U.S. company bringing the goods into the country, not a business in the country of origin.
“This is basically a language scam,” political analyst Arieh Kovler said on X, formerly Twitter. “Tariffs and duties are paid by the importer, the U.S. company bringing in the goods. It isn’t “external revenue” and calling the customs agency an “external revenue service” is just another way of tricking people.”
“This proposal appears to be part of Trump’s more extensive strategy to portray tariffs on foreign imports as a means of offsetting costs for his policy agenda and, at the same time, to appeal to his base with trade-related tough talk,” Fahey said.
However, others have said that placing the responsibility of collecting tariff revenue should fall to a dedicated federal tax collection service.
“Going forward, if America is going to be collecting more tariffs, and especially if there is movement in Trump’s desired direction of substituting tariffs for the income tax as the primary means of financing government, it would make sense to place responsibility for collecting those tariffs in an organization specializing in tax collection,” former U.S. diplomat and political scientist Michael Montgomery told Newsweek.
What People Are Saying
President-elect Trump said: “For far too long, we have relied on taxing our great people using the Internal Revenue Service (IRS). 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.”
Andrew Feinberg, White House Correspondent for the Independent, wrote on X: “The president-elect appears ignorant of the fact that there’s been an “external revenue service” since July 31, 1789. That’s when George Washington signed legislation creating the U.S. Customs Service, the forerunner of what is now @CBP [Customs and Border Protection].”
Oregon Senator Ron Wyden, member if the Senate Finance Committee, said in a statement: “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.”
What’s Next
Exactly how the proposed federal agency will operate and who will be in charge is yet to be revealed, but Trump said on Truth Social that the department would be created on the day of his inauguration—Monday, January 20.
The post Could Donald Trump’s ‘External Revenue Service’ Work? Analysts Respond appeared first on Newsweek.
