WASHINGTON ― Former and soon-to-be President Donald Trump on Tuesday signaled yet again that he is serious about imposing a new regressive tax on Americans by increasing tariffs on imported goods ― this time even suggesting a new government agency to collect the money.
“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. It is time for that to change,” Trump wrote in a social media post.
“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,” he went on. “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 date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!”
It is unclear why the country would need a new “External Revenue Service” when U.S. Customs and Border Protection already collects tariffs from importers at ports of entry, and has done so since the birth of the republic in 1789.
Trump’s transition team did not respond to HuffPost’s queries about his post.
Trump has for many years falsely claimed that U.S. tariffs are paid by foreign nations, when in fact they are paid by American importers. Those costs are then passed along to retailers and are ultimately borne by consumers.
“He continues to mislead the American people about who pays these tariffs,” said Douglas Holtz-Eakin, an economist with the conservative think tank American Action Forum and a former adviser to Republican John McCain’s 2008 presidential campaign. “I’m underwhelmed by the proposal. It’s just not realistic to fund the government with tariffs.”
During his 2024 campaign, Trump promoted tariffs even more aggressively, frequently citing the 1890s as a golden age for the United States due to the period’s high tariffs. On several occasions, he suggested that tariffs could replace the income tax as the main revenue source for the U.S. government.
Were that to happen, it would dramatically shift the tax burden away from wealthier Americans and onto the middle class and the poor, who spend a much larger proportion of their income on imported goods and food.
The federal income tax, in contrast, falls most heavily on wealthier wage earners. About half of all Americans pay no income tax at all, although they do pay Social Security and Medicare taxes.
While Trump’s statement says his “External Revenue Service” would start on the day of his inauguration, it is unclear how that would be possible. He has no ability to create a government agency by fiat, and would need Congress to pass a law establishing such an agency to take over the task of collecting tariffs from Customs.
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Trump does have much broader authority to impose tariffs, however. While the Constitution gives Congress the power to levy tariffs, lawmakers have given the president the ability to impose tariffs unilaterally on “national security” grounds. Trump used that authority to impose tariffs on foreign aluminum and steel in his first term.