Trump announces ‘external revenue service’ to collect foreign tariffs

United States President-elect Donald Trump has announced his intention to create a new department called the “External Revenue Service”, designed to collect “tariffs, duties, and all revenue” from foreign sources.

In a post on his platform Truth Social, Trump said that he would establish the new department as soon as he takes office on January 20.

“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 wrote on Tuesday.

“We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share.”

Trump compared the proposed department to the Internal Revenue Service, which is the US’s domestic tax collector.

The establishment of a new agency requires congressional approval, but Trump enjoys strong support in Congress, as Republicans hold majorities in both the House of Representatives and the Senate.

A plan for increased tariffs

Critics have pointed out that the proposed department would essentially oversee the same functions handled by existing agencies, including the US Department of Commerce and US Customs and Border Protection, the latter of which collects duties and revenues from other nations.

In his race to serve as president for a second term, Trump also pledged to shrink the size of the federal government, though he has since proposed several new agencies and advisory boards.

For example, Trump has already declared his intention to establish a Department of Government Efficiency (DOGE), a nongovernmental group that would advise on how to streamline bureaucracy and slash federal spending.

That proposal has likewise raised scepticism that it would replicate the functions of existing government bodies and advisory boards. Trump has tapped entrepreneurs Elon Musk and Vivek Ramaswamy to lead the planned efficiency group.

His new proposal to establish a “External Revenue Service” follows repeated pledges to impose stiff tariffs on three of the US’s largest trading partners: Canada, Mexico and China.

Shortly after his election in November, for instance, Trump called for Canada and Mexico to pay a 25-percent tariff on their exports to the US, as a way of forcing the two countries to clamp down on the cross-border trafficking of drugs and migrants.

He has also pledged to impose tariffs of 10 percent on global imports into the US, along with a 60-percent tariff on Chinese goods — duties that experts say would raise consumer costs and prompt retaliation against US exports.

The US imports more than it exports from Mexico, Canada and China. Last year, the trade deficit stood at $67.9bn for Canada, $152.4bn for Mexico, and $279.4bn for China, according to the US Bureau of Economic Analysis.

‘Clever marketing’?

The fact that the US has a trade deficit with many of its trading partners has preoccupied Trump since his first term in office and was cited as part of his rationale for initiating a trade war with China in 2018.

Some critics argued that the announcement of a new agency to collect tariffs was a branding exercise more than a substantial policy solution.

“This is clever marketing,” Heather Long, an economic columnist at the Washington Post, wrote on the social media platform X. “But it doesn’t change the fact that American consumers will end up paying these higher tariffs.”

Democratic lawmakers were also quick to criticise the “External Revenue Service” plan.

“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,” Ron Wyden, the top Democrat on the Senate Finance Committee, said in a statement.