President-elect Donald Trump says he’ll establish a new federal agency to collect tariffs, duties and all other foreign revenue, seemingly carving out responsibilities that are currently handled by the Commerce Department, the U.S. Trade Representative and U.S. Customs and Border Protection.
The president-elect said he will establish the agency on Inauguration Day, with the goal of making other countries pay “their fair share.” Tariffs are taxes levied on imported foreign goods. Experts say higher tariffs are typically passed on to the consumer, and if enacted, Trump’s tariff hikes will likely mean higher costs for Americans.
“Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves,” Trump wrote on his social media platform Truth Social. “It is time for that to change. 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 date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!”
It’s not clear how establishing a new federal agency to oversee tariffs will expedite the president-elect’s tariff goals, given that federal agencies are already collecting that revenue. While USTR and the Commerce Department establish tariffs, U.S. Customs and Border Protection is the primary collector and enforcer of tariffs. CBP then deposits collections into the General Fund of the United States.
Trump has threatened to impose 25% tariffs on all goods coming from Mexico and Canada, as well as 10% across-the-board tariffs on all foreign imports, and tariffs of 60% or higher on Chinese goods. Despite Trump’s vows, some Wall Street economists believe it’s unlikely that the new administration would enact a broad-based tariff on all imports due to the potential to reignite inflation while spurring retaliatory tariffs from other nations.
Federal law allows presidents to adjust tariffs based on stated threats to national security, or to remove the practice of a foreign government that the U.S. believes is violating an international trade agreement or is unfair or discriminatory. Trump heavily relied on his tariff authority in his first term, and President Biden’s team didn’t undo all of his tariffs. The Biden administration even imposed additional tariff hikes, including a 100% duty on electric vehicles from China.
The conservative Tax Foundation found that, despite Trump’s fondness for tariffs, the Biden administration has collected more revenue through tariffs on foreign goods than did Trump’s — $89.1 billion under Trump compared with $144 billion under Mr. Biden, as of March 2024. The bulk of revenue under both presidents was collected through tariffs on China.
