Donald Trump has said he will create a new department called the External Revenue Service "to collect tariffs, duties, and all revenue" from foreign sources

President-elect Donald Trump announced plans on Tuesday to establish a new government agency, the External Revenue Service, tasked with collecting tariffs, duties, and other revenues from foreign sources. The announcement comes as Trump prepares to implement new import tariffs after his inauguration next week.

Trump shared his intentions on social media, stating that the agency will be created on January 20, coinciding with the start of his second term. He criticized the longstanding taxation of Americans by the Internal Revenue Service, suggesting it was time to shift the focus.

“Through weak and poorly negotiated trade agreements, the American economy has fueled global prosperity while burdening itself with taxes. That ends now,” Trump wrote on Truth Social. “We will ensure that those profiting from trade with the U.S. begin paying their fair share.”

Unanswered Questions

The announcement left several key details unclear. Trump did not specify whether the new agency would assume responsibilities currently managed by U.S. Customs and Border Protection or the Internal Revenue Service for tariffs, duties, and taxes on foreign entities. It’s also uncertain if the initiative would lead to additional government bureaucracy, potentially conflicting with the objectives of Trump’s informal Department of Government Efficiency.

This effort, led by Elon Musk and Vivek Ramaswamy, aims to identify trillions in potential savings by streamlining government operations.

During his campaign, Trump frequently proposed replacing income taxes with tariff revenues, but analysts argue the math doesn’t support such a shift. The Tax Foundation, a conservative think tank, estimates a universal 20% tariff on imports would generate $4.5 trillion over a decade before economic repercussions reduce net revenues to $3.3 trillion. This pales in comparison to the $16–$18 trillion collected annually by the IRS.

Reactions and Criticism

Senator Ron Wyden, the Senate Finance Committee’s leading Democrat, criticized Trump’s proposal, calling it a “multi-trillion-dollar tax hike” on American families and small businesses, aimed at funding tax breaks for the wealthy.

Trump has outlined plans for tariffs, including a 10% levy on global imports, a 25% duty on goods from Canada and Mexico until stricter border controls are implemented, and a 60% tariff on Chinese products.

Trade experts warn these measures could disrupt international trade, increase costs, and provoke retaliatory actions against U.S. exports.