The Republican Party’s latest move to implement his pledges for strict trade restrictions when he retakes company came from President-elect Donald Trump‘s declaration that he would establish an” External Revenue Service” tasked with collecting tariffs on foreign goods.
Trump stated in a blog to his Truth Social Network on Tuesday that” I will make the EXTERNAL REVENUE SERVICE to gather our Taxes, Duties, and all Profit that comes from European Options.”
” We will begin charging those that make money off of us with Trade, and they will begin paying, FINALLY, their fair share. January 20, 2025, will be the delivery day of the External Profit Service”, he added.
The president-elect didn’t elaborate on whether he intended to establish a new federal bureau or whether his plan was primarily a branding training for already-existing state functions.
Democrats soon made fun of the concept.
” Looks like a ‘ idea of a program,’ huh”? said Representative Richard Neal of Massachusetts, the leading Democrat on the House tax-writing commission, referring to Trump’s obscure claim in a conversation last year to overhaul wellness care.
Tariffs are already collected by Customs and Border Protection, whose agents review documents, conduct reviews, and obtain levies and penalties, with the cash next deposited into the Treasury Department’s General Fund. They account for less than 2 % of national profits.
However, the exercise highlights Trump’s desire to impose tariffs on foreign goods as a means of reducing costs that would otherwise be immediately borne by taxpayers. Trump was elected on a pledge to impose tariffs on both supporters and adversaries, using them as means to increase US profit and compel businesses to re-enter manufacturing, as well as help to balance the nation’s growing deficit.
Experts expressed doubt in response to the news and pointed out that Alexander Hamilton’s time-tested CBP now collects that income. They also made the point that tax revenues are not outside sources because they are provided by US consumers.
Brian Riedl, a senior fellow at the Manhattan Institute and previous Republican staffer at the Senate Finance Committee, called the brand “gimmicky branding that may imitate an existing national organization collecting conventions income.” ” It is not collecting external revenue, it is collecting a tax” on Americans who pay for tariffs, he added.
Ernie Tedeschi, the director of economics at Yale University’s Budget Lab and a former Biden administration official, said that creating a new revenue agency would require a vote in Congress and likely wouldn’t change much about the way the process of gathering tariff revenues.
” A new agency would require Congressional authorization and funding, and since it would just be taking over existing CBP functionality, it’s unlikely much of the day-to-day mechanics of collecting tariff revenue would change dramatically”, Tedeschi said.
Tariff Uncertainty
During the campaign, Trump floated minimum tariffs of 10 % to 20 % on all imported goods, and 60 % or higher on shipments from China. He also pledged to impose additional taxes on Canada, Mexico, and China in November if they did not do more to bolster US borders and stop the flow of undocumented immigrants and illegal drugs.
Mainstream economists warn that Trump’s threatened tariffs will likely cause US consumers to raise prices, exacerbate public concern about inflation, and stifle or reverse trade flows, as well as fail to generate the revenue the president-elect has hoped. While many Wall Street executives and corporate leaders backed Trump, uncertainty surrounding his tariffs has shook markets and the business community.
According to people with knowledge of the situation, members of Trump’s incoming team have been discussing slowly increasing their tariffs each month in an effort to increase their leverage in negotiations with other nations while preventing a rise in inflation.
The people said that the proposal is still in its early stages and has not yet been addressed to Trump.
