Trump Proposes ‘External Revenue Service’ to Collect Tariff Income/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ President-elect Donald Trump announced plans to create the External Revenue Service, a new agency to collect tariffs and other revenues from foreign nations. This controversial proposal, part of Trump’s economic agenda, has drawn criticism from Democrats, who argue it will lead to higher costs for American consumers.
Trump’s External Revenue Service Plan: Quick Looks
- Purpose: Collect tariffs and trade-related revenues from foreign nations.
- Proposed Agency: Modeled after the IRS but focused on international trade.
- Leadership: Billionaires Elon Musk and Vivek Ramaswamy to spearhead efficiency initiatives through the Department of Government Efficiency (DOGE).
- Tariff Policy: Proposes tariffs up to 25% on goods from allies and 60% on Chinese imports.
- Criticism: Democrats call it a tax hike on American families and small businesses.
Trump Proposes ‘External Revenue Service’ to Collect Tariff Income
Deep Look:
Overview of the External Revenue Service
President-elect Donald Trump unveiled plans for the External Revenue Service (ERS), a new federal agency tasked with collecting tariffs and trade-related revenues. Trump likened the ERS to the IRS, emphasizing its focus on generating income from foreign nations rather than domestic taxpayers.
“We will begin charging those that make money off of us with trade, and they will start paying,” Trump said on Truth Social.
Legislative Path and Republican Majority
Establishing a new federal agency requires congressional approval. With Republicans controlling both the House and Senate, the proposal is likely to face less resistance from within Trump’s party, though debates over government expansion and redundancy are expected.
Tariff-Centric Economic Agenda
Trump’s proposal aligns with his broader economic agenda, including imposing tariffs of:
- 25% on goods from allies like Canada and Mexico.
- 60% on goods from China.
Economists warn these tariffs could significantly raise costs for American consumers and businesses.
Leadership and Government Restructuring
Elon Musk and Vivek Ramaswamy, both prominent entrepreneurs, will lead Trump’s Department of Government Efficiency (DOGE) to streamline federal operations. DOGE aims to:
- Cut federal regulations.
- Reduce the size of government.
- Eliminate unnecessary programs.
Democratic Criticism
Democrats immediately opposed the ERS, describing it as a veiled tax increase.
- Sen. Ron Wyden (D-Ore.): “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.”
- Economic Concerns: Critics argue that tariffs are an inefficient way to generate revenue and could hurt American consumers more than foreign competitors.
Economic Implications
While tariffs generate revenue, economists generally view them as a costly method of taxation. They caution that businesses often pass these costs onto consumers, leading to higher prices and reduced economic efficiency.
Next Steps
As Trump prepares for his second term, the ERS proposal will likely be a key focus of his administration’s early legislative agenda. Whether it gains traction will depend on its ability to align with Republican priorities and address bipartisan concerns about its economic impact.
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