Former Congressional Budget Office Director Doug Holtz-Eakin explains the impact of tariffs on Canada's economy and shares his thoughts on President-elect Trump's agenda and the Speaker's vote.
President-elect Trump on Tuesday announced plans to create a new “External Revenue Service” tasked with collecting customs revenue, but economists pushed back, saying the agency that would bear the brunt of tariff costs would be It points out that the company is a U.S. importer, not a foreign company.
“For too long, we have relied on using the Internal Revenue Service (IRS) to tax the greats. Through soft and pathetically weak trade agreements, the American economy has taxed itself while has brought growth and prosperity to the world. Now is the time for that to change,” President Trump wrote in a post on the Truth Social platform.
“Today I am announcing the creation of the Foreign Revenue Service to collect customs duties, tariffs, and all revenues that come from foreign sources. We will charge those who benefit from us in trade. , and they will finally start paying, January 20, 2025 will be the birth date of the IRS,” he added.
Tariffs are taxes levied on imported goods, most often paid by U.S.-based importers to an existing federal agency, U.S. Customs and Border Protection (CBP). The move has sparked a backlash from economists who say the proposed name for the Foreign Revenue Service represents an effort to obscure who will pay the duties.
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President-elect Trump has announced plans to create an “External Revenue Service” that would collect tariffs paid by U.S. importers. (Bill Priano/Getty Images/Getty Images)
“While the president-elect may try to sell the proposed tariff increases as a foreign tax, the message remains that higher tariffs will be paid by American people and businesses who import goods,” said Erica York, deputy commissioner for taxation. Ta. the foundation told FOX Business.
“Tariffs are not foreign revenues. Tariffs are taxes on U.S. importers that shrink both the U.S. economy and U.S. incomes. Tariff increases are a drag on the U.S. economy and threaten to offset the benefits of tax cuts in other countries. “It is used as a major source of tax revenue and should not be relied upon,” York explained.
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President-elect Trump, who appeared here with Canadian Prime Minister Justin Trudeau, who recently announced his resignation, called for tariffs on America's trading partners. (Dan Kitwood/Getty Images)/Getty Images)
Scott Linthicum, vice president of general economics at the Cato Institute, echoed similar sentiments, telling FOX Business: “The agency name is more branding than content, and misleading branding. In most cases, U.S. parties – rather than foreign (“external”) sources – pay U.S. tariffs and, in some recent studies, As has been confirmed, its economic impact is also borne. ”
“Declaring customs duty revenue as “external'' is therefore as misleading as, for example, declaring domestic sales tax revenue “external'' because it is sold at the local Walmart.'' After all, President Trump could call it “foreigners the customs agent,'' but that doesn't change the fact that Americans actually are. “I guess so,” Linthicum said.
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Duties are most often paid by the importer to U.S. Customs and Border Protection upon entry. (Photographer: Luke Charette/Bloomberg via Getty Images/Getty Images)
During his successful campaign to return to the White House, Trump touted plans to impose a 60% tariff on Chinese imports, in addition to flat tariffs of 10% or 20%.
It also imposes 25% tariffs on products from Canada and Mexico, which are parties to the United States-Mexico-Canada Agreement (USMCA), a free trade agreement that President Trump negotiated during his first term as successor to the North American Free Trade Agreement. threatened to impose charges. Trade Agreement (NAFTA).
His campaign platform included customs revenue as a source of tax revenue to offset proposed tax cuts and spending plans.
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President Trump is scheduled to be sworn in for his second term as president on Monday, January 20th. The transition team has indicated that it plans to sign a series of executive orders upon taking office, as new presidential administrations often do.
President Trump's social media posts suggest that the Foreign Exchange and Revenue Service will be created in 2019. inauguration dayHowever, details about whether that will be done by executive order and how the new agency is planned to operate are unclear at this time.
