Donald Trump announced on Tuesday the creation of a new government agency designed to generate billions in taxes and tariffs from foreign nations. The agency, aptly named the External Revenue Service (ERS), will do the exact opposite of the already existing Internal Revenue Service (IRS), which focuses on taxing U.S. citizens.
This is the second department Trump has created independently, following his decision to appoint Elon Musk and entrepreneur Vivek Ramaswamy to head the Department of Global Enterprise (DOGE). Trump argued that the U.S. government has been overly dependent on taxing its own citizens for revenue, criticizing the unpopular efforts of the Internal Revenue Service (IRS) to collect more taxes.
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“For far too long, we have relied on taxing our Great People using the Internal Revenue Service (IRS). Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves,” Trump wrote on Truth Social.
“I am today announcing that I will create the EXTERNAL REVENUE SERVICE [ERS] to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.”
The incoming president announced that the ERS would be launched on January 20 to “begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share.”
Trump, 78, has already warned that he will raise tariffs on foreign nations that fail to align with his strict immigration policies. He has specifically targeted Mexico and Canada with the threat of a 25 percent tariff and has vowed to cut off “business” with countries that refuse to accept deported illegal migrants.
The president-elect has also vowed to impose a 10 percent to 20 percent tariff on all imported goods and up to a 60 percent tariff on products from China.
During his campaign, Trump pledged to overhaul the existing tax system, vowing to eliminate taxes on tips, overtime, and Social Security. He even suggested the possibility of abolishing federal income tax, claiming that his tariff policies would generate sufficient revenue to offset the loss.
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Currently, the responsibility for collecting tariffs lies with U.S. Customs and Border Protection (CBP), which operates under the Department of Homeland Security.
Creating a standalone ERS department would, in theory, require congressional approval. However, Trump could potentially try to integrate the new agency into an already existing department.
Trump ally Steve Bannon told Politico earlier on Tuesday that the ERS should be placed under the Treasury Department to ease the workload of the IRS. However, Bryan Riley from the National Taxpayers Union noted that “the federal government collects tariffs from U.S. importers,” casting doubt on the practicality and functionality of the proposed agency.
“It does not collect duty revenue from foreign sources, so it is not clear what the point of a new External Revenue Service would be,” Riley told The New York Post.
“A better priority would be to improve the operation of the Internal Revenue Service to better serve US taxpayers.”
However, economist EJ Antoni of the Heritage Foundation told the outlet that “I really, really love this idea.”
“Anything that gets us away from income taxes and towards tariffs is a great idea,” added Antoni, saying that the ERS will likely come about through the “transformation” of a current agency into one that “would better serve” the American people.
