Trump plans a new agency to collect foreign revenue

In preparation for his inauguration next week, U.S. President-elect Donald Trump announced on Tuesday that he will establish a new government agency, the External Revenue Service, to collect tariffs, duties, and all revenue from foreign sources.

In a social media post, Trump declared that he would establish the department on January 20, the day he takes office as president for a second term, and added that the Internal Revenue Service has been taxing Americans for an excessive amount of time, as The Hill reported.

"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," the Republican said in a post 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."

Undecided Details

Trump did not clarify if the new agency would replace U.S. Customs and Border Protection's tariff, duty, fee, and fine collections or the IRS's international business and individual income tax collection.

It was unclear if the move would create more government bureaucracy, which would seem to contradict Trump's informal Department of Government Efficiency, led by billionaire Elon Musk and former biotech executive Vivek Ramaswamy to save trillions of dollars by streamlining government operations.

Although Trump proposed replacing U.S. income taxes with tariff money during his campaign, private economists and forecasts disagree with the statistics.

The conservative Tax Foundation predicts a 20% tariff on all U.S. imports would produce $4.5 trillion over 10 years, but negative economic impacts would eventually reduce net collection to $3.3 trillion. In fiscal 2023, the IRS collected $4.69 trillion in gross tax receipts.

From The Other Side

Senator Ron Wyden, the senior Democrat on the Senate Finance Committee, expressed his disapproval of Trump's proposal.

"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.

Trump has suggested a 10% tariff on global imports, a 25% punitive duty on imports from Canada and Mexico until they implement measures to prevent the illegal crossing of borders by migrants and drugs, and a 60% tariff on Chinese products.

According to trade experts, the duties would disrupt trade flows, increase costs, and provoke retaliation against U.S. exports.