Washington, D.C.—President-elect Donald Trump has unveiled plans to establish a new federal agency, the External Revenue Service (ERS), tasked with collecting tariffs, duties, and other revenues from foreign sources. The announcement, made on the eve of his second inauguration, signals a bold step in his broader effort to realign the United States’ trade policies and reduce the domestic tax burden.
The ERS is designed to function as the international counterpart to the Internal Revenue Service (IRS), which handles domestic tax collection. Trump emphasized that this new agency will target foreign entities engaging in trade with the U.S., ensuring they “pay their fair share.”
“For too long, American workers and families have shouldered the cost of foreign trade imbalances,” Trump stated during a press conference. “The External Revenue Service will level the playing field by making foreign beneficiaries of our market contribute to our prosperity.”
Proposed Tariff Increases
Key to the ERS’s revenue generation strategy is a series of proposed tariff hikes. The plan includes a 25% tariff on imports from allies such as Canada and Mexico and up to a 60% tariff on goods from China. These measures aim to reduce trade deficits while creating a significant revenue stream for the federal government.
Challenges in Congress
While the Republican majority in both the House and Senate gives Trump’s proposal a strong legislative foundation, the plan has sparked considerable debate. Democratic lawmakers, led by Senator Ron Wyden, have criticized the initiative as a veiled tax hike on American consumers and small businesses. “The costs of these tariffs will ultimately fall on everyday Americans,” Wyden warned.
Despite these objections, Trump’s team remains optimistic. “The ERS will mark a new chapter in American trade policy,” said an unnamed administration official. “This is about ensuring fairness in our global economic relationships.”
Leadership and Efficiency Efforts
Trump also announced the appointment of high-profile leaders Elon Musk and Vivek Ramaswamy to spearhead the Department of Government Efficiency (DOGE), a nongovernmental task force. DOGE will focus on identifying inefficiencies and streamlining federal operations to complement the administration’s goals of reducing government size and scope.
Economic Concerns
Economists have expressed mixed reactions to the plan. While supporters argue that tariffs can bolster domestic industries, critics warn of potential retaliation against U.S. exports and increased costs for consumers. “Tariffs are a double-edged sword,” noted Dr. Laura Chen, a trade policy expert. “They may generate revenue, but the economic ripple effects could be significant.”
What’s Next?
The ERS proposal is set to move through Congress in the coming weeks. If approved, the agency would begin operations on January 20, coinciding with Trump’s inauguration. The administration hopes this initiative will solidify its commitment to “America First” policies while addressing longstanding trade inequities.
Public Reaction
Reactions to the announcement have been polarized. Supporters hail the ERS as a revolutionary approach to trade, while detractors fear it could escalate tensions with key trading partners. As the debate unfolds, one thing remains clear: the creation of the External Revenue Service marks a defining moment in U.S. trade policy.
