President-elect Donald Trump's latest initiative promises to reshape how the United States collects foreign-derived revenue through a novel federal agency.
According to Fox Business, Trump announced plans to establish the "External Revenue Service," a new agency dedicated to collecting tariffs and other foreign revenue streams owed to the United States, with operations set to begin on January 20, 2025.
Trump revealed the initiative through his TRUTH Social platform, emphasizing a shift away from domestic taxation toward collecting revenue from international trade partners. The announcement coincides with his broader economic strategy, focusing on aggressive tariff policies targeting major trading partners, including China, Canada, Mexico, and the European Union.
The president-elect's transition team, led by Treasury Secretary nominee Scott Bessent, incoming National Economic Council director Kevin Hassett, and future Council of Economic Advisers leader Stephen Miran, is examining various approaches to implement the tariff increases.
Their strategy considers utilizing the International Emergency Economic Powers Act to gradually raise tariffs by 2% to 5% monthly on trading partners.
Trump shared his vision for the new agency on TRUTH Social, stating:
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. 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.
The transition team's approach aims to minimize potential inflationary effects while maintaining pressure on international trade partners. This gradual implementation strategy represents a more nuanced approach compared to Trump's campaign promises of immediate, substantial tariff increases.
Current federal infrastructure already includes mechanisms for collecting and managing tariff revenue through established agencies. The Department of Commerce and the Office of the United States Trade Representative determine tariff policies, while U.S. Customs and Border Protection handles collection and enforcement responsibilities.
These existing agencies currently deposit collected tariffs into the United States General Fund. The announcement has raised questions about how the proposed External Revenue Service would integrate with or replace these established systems.
The president-elect's recent statements at Mar-a-Lago included specific threats of "substantial tariffs" against Canada and Mexico, contingent on their cooperation in addressing drug trafficking and border security concerns. These proposals align with his broader campaign promises of implementing widespread tariff increases on imported goods.
The incoming administration faces the challenge of establishing this new agency while managing existing trade relationships and economic implications. Trump's proposed tariff structure includes a baseline of 10% to 20% on all imported goods, with significantly higher rates of up to 60% targeted at Chinese imports.
Trump's vision extends beyond North American trading partners to include the European Union, which he has warned must increase purchases of American oil and gas products or face comprehensive tariffs. The president-elect has also indicated plans to use tariffs as leverage against China regarding illegal drug trafficking concerns.
The establishment of the External Revenue Service represents a significant shift in U.S. trade policy and revenue collection methods. Set to launch on January 20, 2025, this initiative reflects Trump's broader economic strategy of reducing domestic taxation while increasing revenue from foreign sources through tariffs and duties.
