Donald Trump to Launch External Revenue Service: What to Know

The Trump administration is preparing to launch the “External Revenue Service,” a new tariff-collecting agency which it hopes will contribute to the eventual elimination of the Internal Revenue Service (IRS).

During a cabinet meeting on Monday, Commerce Secretary Howard Lutnick said he was “excited” about April 2—dubbed America’s “liberation day” by President Donald Trump. Lutnick added that the administration would be launching the External Revenue Service, though it was unclear whether he was suggesting that the agency would begin operations on that date.

Newsweek has reached out to the Commerce Department via email for clarification.

Why It Matters

The administration has said that the establishment of the new agency will facilitate Trump’s trade agenda and expedite tariff collection, arguing that the resulting revenues will lead to lower taxes on American citizens and bring forward the eventual abolition of the IRS, currently the government’s main revenue-generating agency.

What To Know

During his inauguration address, President Trump said that the External Revenue Service would be tasked with collecting “all tariffs, duties, and revenues.”

In a post to Truth Social days earlier in which he announced the plan, Trump 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 a day-one memorandum, entitled “America First Trade Policy,” Trump said that the Secretary of the Treasury, alongside the Secretaries of Homeland Security and Commerce, would begin investigating possibility and implementation of this new agency.

Tariffs are collected by the national customs authority of the country receiving the imported goods. In the case of the U.S, this is currently carried out by U.S. Customs and Border Protection. The administration has not yet clarified whether the External Revenue Service would take over this responsibility from the law enforcement agency.

During an interview with Fox News last month, Lutnick said that Trump’s overarching goal was to “abolish the Internal Revenue Service and let all the outsiders pay,” arguing that the External Revenue Service would facilitate this transition.

Economists and tax policy experts previously told Newsweek that the disparity in tax- and trade-related revenues would prevent an External Revenue Service from fully supplanting the IRS, even with a drastic increase in tariffs imposed by the administration.

A June report from the Peterson Institute for International Economics found that in 2023, tariffs levied on imported goods totaled $3.1 trillion, compared to the over $20 trillion levied on incomes.

What People Are Saying

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.”

Economist and tax policy professor Kimberly Clausing previously told Newsweek that the establishment of an external revenue service was “deeply impractical”: “First, we already have a Customs and Border Protection office … including officials who collect tariffs. Second, it seems like an odd move for an Administration supposedly focused on efficiency (see DOGE) to suggest a redundant government agency as a solution. Even very high tariffs could only replace a minority of the revenue raised by income taxation, and such high tariffs would cripple the economy.”

What Happens Next?

As well as the possible launch of the new tariff-collecting agency, April 2 is also set to mark the beginning of President Trump’s reciprocal tariffs, intended as a response to the tariffs imposed on the U.S, and other “unfair” practices by America’s trading partners.