In a groundbreaking announcement that could herald a new era for US trade policy, President-elect Donald Trump has unveiled his plan to establish an “External Revenue Service” tasked with collecting tariffs and foreign revenue. The move signals a dramatic shift away from income tax and towards an import-focused model.
“For far too long, we have relied on taxing our great people using the Internal Revenue Service (IRS),” Trump declared in a post on his Truth Social network. “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.”
Birth of the External Revenue Service
Trump’s ambitious vision for the External Revenue Service, or ERS, would see it serve as the foreign counterpart to the existing IRS. The president-elect wasted no time in laying out his timeframe, stating that the “birth date” of this new federal entity would coincide with his inauguration on January 20, 2025.
While details remain scarce at this early stage, Trump’s announcement strongly implies that the ERS would have the status and authority of a full-fledged government agency. Its core mission? To spearhead the administration’s push towards a tariff-centric revenue model.
"We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share." President-elect @realDonaldTrump on his plan for an External Revenue Service. Major implications for #trade & #tariffs. https://t.co/aNz4LUaxxY
— Economic Insights (@EconInsights) January 14, 2025
The Bannon Connection
Trump’s bombshell announcement came mere hours after his longtime ally and former White House chief strategist Steve Bannon floated a similar concept at a conference hosted by Politico. “Tariffs paid for everything up until the early 20th century,” Bannon asserted, arguing that the US should charge “fees” for access to its lucrative market.
“America’s behind the golden door, OK? And this market is the most robust, lucrative market in the world, and we shouldn’t just let people have access, we shouldn’t let foreigners have access to this market and to the American people and American citizens for free.”
– Steve Bannon, Former White House Chief Strategist
Bannon’s provocative remarks, coupled with Trump’s swift follow-up, strongly suggest a coordinated effort to fundamentally reorient US fiscal and trade policy. The proposed ERS would mark a radical departure from the current system, where tariffs are collected by Customs and Border Protection under the Department of Homeland Security.
Towards a Tariff-Driven Economy?
Since his election victory in November, Trump has repeatedly hinted at his desire to shift the economic burden away from US taxpayers and onto foreign importers. The president-elect has threatened tariffs ranging from 10% to 20% on goods from key trading partners like China, Canada, and Mexico, despite warnings from economists about potential inflationary risks.
- China: Additional tariffs threatened on top of existing duties
- Canada & Mexico: Import taxes floated despite USMCA trade pact
- European Union: Potential target as Trump decries “unfair” trade practices
While the full scope of Trump’s tariff regime remains unclear, sources close to the transition suggest that the administration may seek a targeted approach focused on “critical imports” rather than a blanket tax on all foreign goods. Such a strategy could allow the ERS to maximize revenue while minimizing consumer impact.
The Road Ahead
As Inauguration Day draws near, all eyes will be on the nascent External Revenue Service and its role in shaping the future of American trade. Will Trump’s bold gambit pay off, ushering in a new era of robust domestic manufacturing and reduced reliance on foreign imports? Or will aggressive tariffs spark a devastating trade war that leaves US consumers footing the bill?
Only time will tell, but one thing is certain: the ERS represents a seismic shift in US economic policy, one that could have profound implications for businesses, workers, and households across the nation. As the Trump administration prepares to take the reins, the world watches with bated breath, eager to see how this high-stakes experiment in tariff-driven governance will unfold.
