(ProsperNews.net) – President-elect Donald Trump proposes the establishment of an “External Revenue Service” to restructure tax collection methods by tapping into international trade tariffs, but who really pays the price?
At a Glance
- Trump’s “External Revenue Service” will collect tariffs from imports rather than taxing U.S. citizens directly.
- The new agency is planned to start functioning on January 20, 2025, coinciding with his second inauguration.
- Current tariff collection handled by U.S. Customs and Border Protection could change under this plan.
- Economists argue that U.S. importers will bear the cost, not foreign entities as touted.
Trump’s New Tax Plan
President-elect Donald Trump aims to create an “External Revenue Service” responsible for collecting tariffs, duties, and revenue from foreign sources. This proposal is expected to relieve American taxpayers by transferring the tax burden to global import activities, according to Trump. As federal law allows for tariff adjustments based on national security or unfair trade practices, Trump may declare a national economic emergency to facilitate these changes. January 20, 2025, marks the proposed agency’s establishment.
By targeting imports from China, Canada, and Mexico with new tariffs, Trump intends to ensure that foreign entities contribute their fair share. “We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share,” Trump stated. However, critics debate who truly shoulders these tariffs’ cost. While tariffs are expected to generate revenue to support Trump’s tax cuts and spending plans, the burden often falls on U.S. importers, not the foreign suppliers.
Concerns Over Domestic Economic Impact
Many experts argue that while tariffs are technically taxes on foreign products, they lead to increased costs for U.S. consumers who purchase these imported goods. The Trump administration’s strategy also faces skepticism due to potential inflation and retaliatory tariffs from trade partners. Erica York from the Tax Foundation noted, “The president-elect may try marketing his higher tariff agenda as an external tax, but messaging does not change that higher tariffs will be paid by the people and businesses in the United States who import goods.”
“The president-elect may try marketing his higher tariff agenda as an external tax, but messaging does not change that higher tariffs will be paid by the people and businesses in the United States who import goods.” – Erica York
Scott Lincicome from the Cato Institute echoed this sentiment, arguing that U.S. entities rather than foreign sources pay these tariffs. This misalignment contradicts the “External Revenue Service” name. The confusion could affect public perception of the fiscal benefits Trump’s plan aims to deliver. The Biden administration already surpassed Trump’s tariff revenue, collecting $144 billion compared to $89.1 billion, mainly from Chinese goods.
Strategic Intent Behind the Tariffs
The “External Revenue Service” forms a keystone in Trump’s broader campaign platform designed to balance tax cuts and increased spending. By shifting the tax burden away from American taxpayers, Trump seeks to bolster the national economy and maintain fiscal stability. Yet, the anticipated revenue generation remains speculative due to potential economic disruptions caused by increased tariffs and the global trading partners’ pushback.
“I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources. We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth day of the External Revenue Service.” – Trump
While the proposal carries a patriotic appeal by redirecting the nation’s financial obligations, observers await its practical impacts on America’s economy. As the administration builds on this proposal, the definitive gain or loss from Trump’s fiscal redirection may hinge on evolving global trade dynamics and domestic purchasing power.
Copyright 2025, ProsperNews.netÂ
