On Tuesday, President-elect Donald Trump unveiled his proposal to establish a new federal agency called the External Revenue Service (ERS), designed to manage the collection of tariffs and revenues from foreign nations.
“We will start charging those profiting from our trade relationships, and they will pay,” Trump announced via Truth Social, his social media platform. He likened this new agency to the Internal Revenue Service, which oversees domestic tax collection.
Creating a federal agency requires congressional approval, and with Republicans holding a majority in both the House and Senate, the proposal has a pathway for potential legislative support.
Interestingly, Trump, who has consistently championed reducing government size, is proposing a new entity to undertake duties currently managed by the Commerce Department and U.S. Customs and Border Protection. These existing agencies already oversee the collection of duties and trade-related revenues.
A Focus on Efficiency: The Role of DOGE
In tandem with the ERS announcement, Trump highlighted the efforts of the Department of Government Efficiency (DOGE), a nongovernmental task force aimed at streamlining federal operations. The DOGE, as part of Trump’s “Save America” agenda for his second term, has been tasked with identifying inefficiencies, reducing federal workforce numbers, eliminating programs, and cutting regulations.
Billionaires Elon Musk and Vivek Ramaswamy have been appointed to lead the DOGE initiative. Their mission aligns with Trump’s vision of reshaping the federal government’s role and size.
Tariffs as a Cornerstone of Economic Policy
A significant element of Trump’s economic strategy involves aggressive tariff policies. His administration has proposed levies of up to 25% on goods from allied nations like Canada and Mexico and as high as 60% on imports from China. These measures aim to bolster U.S. economic interests but have drawn widespread criticism from economists who argue that the costs of tariffs are often transferred to consumers. Critics view tariffs as an inefficient mechanism for generating government revenue and promoting economic growth.
Political Reactions and Criticism
Democratic lawmakers were quick to denounce the External Revenue Service plan. Oregon Senator Ron Wyden, the leading Democrat on the Senate Finance Committee, criticized the proposal, stating, “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 fund another round of tax handouts to the wealthy.”
Broader Implications
As Trump prepares for his second term, his proposal for the External Revenue Service and his tariff-heavy agenda underscore his commitment to reconfiguring America’s economic framework. However, the feasibility, effectiveness, and economic consequences of these plans remain subjects of intense debate.