The Trump administration is getting ready to start the “External Revenue Service,” a new agency that will collect tariffs. The administration hopes that this will help get rid of the Internal Revenue Service (IRS).
Monday at a cabinet meeting, Commerce Secretary Howard Lutnick said he was “excited” about April 2, which President Trump has called “liberation day” for the United States. Lutnick also said that the administration would be starting up the External Revenue Service, but it wasn’t clear if he meant that the agency would start working on that date.
The administration has said that creating the new agency will help Trump’s trade agenda and speed up the collection of tariffs. They say that the extra money will bring about lower taxes for Americans and speed up the process of getting rid of the IRS, which is currently the government’s main revenue-generating agency, Newsweek reported.
President Trump said at his inauguration that the External Revenue Service would be in charge of collecting “all tariffs, duties, and revenues.”
That’s when Trump first talked about the plan on Truth Social. He said that the U.S. would “begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share.”
In his first memo, titled “America First Trade Policy,” Trump said that the Secretary of the Treasury, along with the Secretaries of Homeland Security and Commerce, would start looking into how this new agency could work and if it was even possible.
Tariffs are collected by the country’s customs office that is getting the goods from other countries. U.S. Customs and Border Protection is in charge of this in the United States right now. The administration has not yet said for sure if this job will be given to the External Revenue Service or the law enforcement agency.
In an interview with Fox News last month, Lutnick said that Trump’s main goal was to “get rid of the Internal Revenue Service and make everyone else pay.” He said that the External Revenue Service would help make this happen.
Economists and tax policy experts have told Newsweek that an External Revenue Service would not be able to fully replace the IRS because of the difference in tax and trade-related revenues. This is true even if the administration drastically raised tariffs.
A report from June from the Peterson Institute for International Economics said that in 2023, tariffs on imported goods added up to $3.1 trillion, while incomes were taxed at over $20 trillion.
Secretary of Commerce Howard Lutnick speaking to Trump during Monday’s cabinet meeting, said: “What is so exciting is April 2 is just around the corner and that’s American Liberation Day. That’s the day when the rest of the world starts to treat America with respect—and your leadership, understanding how the rest of the world treats us and what balance and what fair trade finally is going to be, is going to take care of America, it’s going to launch the external revenue service, to start to build the power and prestige of America back, and I’m honored to be helping you on that course.”
President Trump, during his inauguration speech, said: “I will immediately begin the overhaul of our trade system to protect American workers and families. Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens. For this purpose, we are establishing the External Revenue Service to collect all tariffs, duties, and revenues. It will be massive amounts of money pouring into our Treasury, coming from foreign sources.”
During Monday’s cabinet meeting, Trump said: “It’s an interesting term right—the External Revenue Service? We’re going to take in a lot of money from the outside and that’s going to keep our taxes low, and I think getting a lot lower. It’s going to be a lot of money. The external will take care of the internal to a large extent.”
