With just days remaining ahead of Donald Trump’s second inaugural, there’s ongoing chatter about whether the president-elect will follow through on his trade tariff threats. Sure, the Republican ran on the issue ahead of his re-election. And yes, he’s offered plenty of bluster. But when push come to shove, some continue to suggest, Trump might not pull the trigger on a misguided plan that would undermine the economy.
It was against this backdrop that the president-elect made an announcement of sorts by way of his social media platform:
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. 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.
Before we dig in on this, it’s worth pausing to acknowledge the “watch what they do, not what they say” maxim. Some reports over the last 24 hours indicated that Trump is creating a new bureaucracy to run parallel to the IRS, pointing to his online missive. The trouble is, there’s no way of knowing whether the Republican will actually try to create an “External Revenue Service,” or whether this will soon join the long list of ideas that he briefly seems excited about, only to never mention again.
But for the sake of conversation, let’s say Trump was serious about his latest plan. Let’s assume that, starting next week, the new GOP administration really will have a new layer of bureaucracy that will focus exclusively on collecting foreign money coming into the United States, thanks in part to his plans for sweeping new tariffs.
What’s wrong with this? Quite a bit, actually.
For one thing, the idea of an “External Revenue Service” appears to be a clumsy attempt at political packaging: The president-elect has long struggled to understand the basics of trade policy, and he apparently continues to believe that tariffs will generate vast wealth that will pour into the government’s coffers.
As he really ought to know by now, it’s American consumers, not foreign sources, that would pay more as a result of Trump’s policies.
But even if we put this aside, a more glaring problem emerges: Trump seems determined to create a new bureaucracy that’s wildly unnecessary, because the United States already has an agency responsible for collecting foreign revenue. The president-elect has probably heard of it: U.S. Customs and Border Protection already does what the “External Revenue Service” would presumably do.
The Washington Post reported that Trump’s announcement “sparked immediate confusion about how such an office would work in practice.”
U.S. Customs and Border Protection currently administers tariff policy, which is set by the president and Congress. Importers self-classify and declare the value of their goods, and CBP officials review and audit that paperwork before collecting any duties, penalties and fees, according to the Congressional Research Service. Those funds are deposited into the U.S. General Fund, run by the Treasury Department. The government collected about $80 billion in tariffs and duties in 2023, according to a White House estimate.
Does Trump know this? Did he give this a moment’s thought before making the announcement? Did it occur to him that maybe he could ask someone who actually knows something about the issue?
Unfortunately, I think we know the answer to these questions.
This article was originally published on MSNBC.com