Former Congressional Budget Office Director Doug Holtz Akin explains the impact of tariffs on the Canadian economy and shares his thoughts on President-elect Trump’s agenda and the House Speakership vote.
President-elect Trump Plans were announced Tuesday to create a new “External Revenue Service” that would be tasked with collecting revenue from the tariffs, but economists are pushing back and noting that the brunt of the tariffs’ costs will fall on American rather than foreign companies. Importers have to suffer.
“For 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 starved the world of growth while taxing itself. And prosperity has come. Now is the time to change that,” Trump wrote in a post on the Truth social platform.
“I am announcing today that I will build external revenue service To collect all revenues coming from our tariffs, duties and foreign sources. We will start charging those who make money from us from trading, and eventually they will start paying their fair share. January 20, 2025, will be the birthday of the External Revenue Service,” he said.
Tariffs are taxes on imports, which in most cases are paid by the US-based importer to an existing federal agency, US Customs and Border Protection (CBP). This dynamic has prompted criticism from economists who say that the name of the proposed external revenue service represents an attempt to obscure who pays for the tariffs.
Trump denies reports of change in tariff plans
President-elect Trump said he plans to create an “External Revenue Service” to collect tariffs paid by American importers. (Bill Pugliano/Getty Images/Getty Images)
“The President-elect may try to market his high tariff agenda as an external tax, but the messaging won’t change it high tariff “The payment will be made by people and businesses importing goods into the United States,” Erica York, vice president of the Tax Foundation, told Fox Business.
“Tariffs are not external revenue; they are taxes on US importers that reduce both the US economy and US incomes. Higher tariffs will create downward pressure on the US economy and threaten to offset the benefits of tax cuts elsewhere, relying on them should not be used as a major source of tax revenue,” York explained.
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President-elect Trump, seen with Canadian Prime Minister Justin Trudeau, who recently announced his resignation, campaigned on imposing tariffs on US trade partners. (Dan Kitwood/Getty Images/Getty Images)
Scott Lincicome, vice president of general economics at the Cato Institute, expressed a similar sentiment and told Fox Business: “The agency’s name is more branding than substance – and misleading branding at that. In the vast majority of cases, parties in the United States – Americans—not foreign (‘external’) sources—pay the tariffs and, as several recent studies have confirmed, bear their economic consequences.”
“Declaring tariff revenues ‘externalized’ would be just as misleading as declaring domestic sales tax revenues ‘externalized’ as it applies to foreign-made goods sold at your local Walmart. At the end of the day, Trump Call it ‘pay off the foreign tariff agency,’ and it still won’t change the fact of what Americans really are,” Lincicome said.
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In most cases tariffs are paid by importers to U.S. Customs and Border Protection at the point of entry into the country. (Luke Sherratt/Bloomberg via Getty Images/Getty Images)
During his successful campaign to return to the White House, Trump promoted plans to impose blanket tariffs of 10% or 20% – as well as a larger tariff of 60% on goods. imported from china,
He also threatened to impose a 25% tariff on goods coming from Canada and Mexico, both of which US-Mexico-Canada Agreement (USMCA) – A free trade agreement negotiated by Trump during his first term as a successor to the North American Free Trade Agreement (NAFTA).
His campaign platform Income from tariffs was included as a source of tax revenue to offset proposed tax cuts and spending plans.
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Trump is scheduled to be inaugurated for his second term as president on Monday. His transition team has indicated that he plans to sign a slate executive Order Upon taking office, as new presidential administrations often do.
Trump’s social media post suggests External Revenue Service will be created inauguration dayHowever, the details of whether this will be done through executive order and how the new agency plans to operate are unclear at this time.
