The Trump administration is preparing to launch the “External Revenue Service,” a new agency tasked with the collection of tariffs. The administration believes this initiative will facilitate the elimination of the Internal Revenue Service (IRS).
During a cabinet meeting on Monday, Commerce Secretary Howard Lutnick expressed his enthusiasm for April 2, a date President Trump has designated as “liberation day” for the United States. Lutnick mentioned the establishment of the External Revenue Service, although it remains uncertain whether he intended for the agency to commence operations on that specific date.
The administration asserts that the formation of this new agency will bolster Trump’s trade agenda and enhance the efficiency of tariff collection. They claim that the additional revenue generated will lead to reduced taxes for Americans and expedite the dissolution of the IRS, which currently serves as the primary revenue-collecting entity for the government, as reported by Newsweek.
At his inauguration, President Trump stated that the External Revenue Service would oversee the collection of “all tariffs, duties, and revenues.” This was the first time Trump publicly discussed the initiative on Truth Social, where he indicated that the U.S. would “begin charging those who profit from us through trade, and they will finally start paying their fair share.”
In his initial memorandum titled “America First Trade Policy,” Trump outlined that the Secretary of the Treasury, along with the Secretaries of Homeland Security and Commerce, would explore the feasibility and operational framework of this new agency.
Currently, tariffs are collected by the U.S. Customs and Border Protection, which manages the importation of goods from other countries. The administration has yet to clarify whether the responsibilities of tariff collection will be transferred to the External Revenue Service or remain with the existing law enforcement agency.
In a recent interview with Fox News, Lutnick emphasized that Trump’s primary objective is to “eliminate the Internal Revenue Service and ensure that everyone else contributes.” He stated that the External Revenue Service would play a crucial role in achieving this goal.
Economists and tax policy specialists have informed Newsweek that an External Revenue Service could not entirely substitute the IRS due to the disparities in tax and trade-related revenues. This remains the case even if the administration were to significantly increase tariffs.
A June report from the Peterson Institute for International Economics indicated that in 2023, tariffs on imported goods totaled $3.1 trillion, whereas income taxes exceeded $20 trillion.
During a cabinet meeting on Monday, Secretary of Commerce Howard Lutnick expressed to Trump, “What is particularly exciting is that April 2 is just around the corner, marking American Liberation.”
