US President-elect Donald Trump has revealed plans to create a new government agency called the External Revenue Service to collect tariffs, duties, and all revenue from foreign sources. The announcement comes as he prepares to implement new import tariffs, which will be a significant part of his economic agenda as he takes office for a second term on January 20.
Details of the Proposed External Revenue Service
In a social media post on Truth Social, Trump stated that the new agency would be established on January 20, the day he is sworn in for a second term. Trump expressed frustration with the current taxation system, accusing the Internal Revenue Service (IRS) of overburdening Americans.
He stated, “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.” Trump added that he would “begin charging those that make money off of us with trade, and they will start paying, FINALLY, their fair share.”
However, Trump did not clarify whether the External Revenue Service would replace the US Customs and Border Protection (CBP) in collecting tariffs and duties, nor did he specify its role in relation to IRS collections of taxes on foreign corporate and individual income.
Trump’s announcement has raised several questions about the functionality of the new agency. There was no immediate comment from his transition team to clarify whether the External Revenue Service would take over responsibilities currently handled by the Customs and Border Protection (CBP) or the IRS. The proposal also leaves uncertainties about the potential for increased government bureaucracy, which might contradict Trump’s previous efforts to streamline government operations through his Department of Government Efficiency initiative led by figures like Elon Musk and Vivek Ramaswamy.
Trump’s Tariff Plans and Economic Concerns
Trump’s tariff plans include a 10% tariff on all global imports, a 25% punitive tariff on goods from Canada and Mexico until they address issues like drug smuggling and migrant crossings, and a 60% tariff on Chinese goods. Trump has frequently mentioned during his campaign the possibility of replacing income taxes with revenue generated from tariffs, though experts have expressed concerns about the feasibility of this plan.
The Tax Foundation, a conservative-leaning think tank, has estimated that a universal 20% tariff on all imports could generate $4.5 trillion over a decade, though they predict this would be reduced to $3.3 trillion due to negative economic effects. In comparison, the IRS currently collects between $16 trillion to $18 trillion annually in taxes.
Trump’s tariff proposals have faced significant opposition. Senator Ron Wyden, the top Democrat on the Senate Finance Committee, criticized the plan, calling it a “multi-trillion-dollar tax hike” on American families and small businesses. Wyden argued that the tariffs would only benefit the wealthy, as Trump has historically advocated for tax cuts for the rich.
“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.
Trade experts also warn that Trump’s proposed duties could disrupt global trade, raise costs for US consumers, and provoke retaliatory measures from foreign nations.
Potential Impact of the Proposed Tariffs
Trump’s proposed tariffs, especially those targeting key trade partners like China, Canada, and Mexico, are expected to significantly impact trade relations and global supply chains. Experts predict that these measures could lead to higher costs for consumers and industries in the US, as imported goods would become more expensive.
The threat of retaliation from foreign countries could also damage US exports. Countries like Canada and China may impose tariffs on American goods in response, potentially triggering a global trade war.
As Donald Trump prepares for his second term, his proposal to create the External Revenue Service and impose sweeping tariffs on imports signals a dramatic shift in US trade policy. While the full details remain unclear, the plan has already sparked heated debate, with critics raising concerns about its potential economic fallout. As Trump moves forward with his agenda, the country will be watching closely to see how these bold measures are implemented and what impact they will have on both the US and global economies.
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