President Trump announced a plan to create the External Revenue Service, aiming to generate significant revenue through tariffs on foreign goods. In his inaugural address, he emphasized a shift to taxing foreign countries instead of American citizens. Experts note that despite the agency's name, most tariff revenue would still be sourced from U.S. import businesses. Historically, tariffs were a primary revenue source until the income tax was enacted in 1913, after which tariffs diminished in importance. The proposal invites both interest and skepticism regarding its implementation and differentiation from existing customs processes.
Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens, Mr. Trump said on Monday in his inaugural address.
Much about the new agency remains unclear, including how it would differ from the government's current operations.
Trade experts said that, despite the name external, the bulk of tariff revenue would continue to be collected from U.S. businesses that import products.
With the creation of the income tax in 1913, tariffs became a minor source of government revenue.
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