President Donald Trump has declared his intention to establish a new federal department, the External Revenue Service (ERS), aimed at collecting tariffs and duties from foreign sources. The announcement, made shortly after the start of his second term, has sparked discussions among trade analysts and raised concerns about potential impacts on international relations, particularly with neighboring countries like Canada and Mexico. Trump's administration plans to impose higher tariffs on imports, which he believes will shift the financial burden to foreign nations. However, critics argue that such taxes are ultimately paid by U.S. importers, not foreign entities. The proposed ERS would ostensibly take over functions similar to those of existing agencies like the Department of Commerce and U.S. Customs and Border Protection (CBP).

In a statement on social media, Trump emphasized that the ERS would ensure that countries benefiting from trade with the United States finally pay their "fair share." This move aligns with his broader strategy of using tariffs as a tool to promote domestic industries and address what he perceives as unfair trade practices. While the exact operational details of the ERS remain unclear, it is expected to focus on collecting revenue from foreign sources involved in trade with the U.S. The President also announced that tariffs of 25% would be imposed on goods from Mexico and Canada, with even higher rates anticipated for products from China.

The creation of the ERS has drawn skepticism from various quarters. Some experts argue that the new agency is redundant, given that CBP already collects tariff revenue under the direction of the Treasury Department. Michael Fahey, CEO of Fahey Communications, noted that the proposal seems unnecessary since current government agencies already handle these tasks. Similarly, Tom Madrecki of the Consumer Brands Association questioned the practicality of the ERS, suggesting that it might only lead to administrative reshuffling without adding significant value. Critics further contend that labeling the customs agency as an "External Revenue Service" could mislead the public into thinking that foreign entities, rather than U.S. importers, bear the cost of tariffs.

Despite the controversy, Trump remains confident that tariffs will bolster the U.S. economy and encourage businesses to return to American shores. He reiterated this point during a speech at Capital One Arena, asserting that tariffs would make the country "rich as hell." However, political analyst Arieh Kovler pointed out that this rhetoric may be more about appealing to Trump's base than addressing economic realities. As the administration moves forward with its plans, the success of the ERS will depend on congressional approval, especially given the Republican majority in both chambers of Congress. The coming weeks will likely see intense debate over the merits and feasibility of this new initiative.