Capitalmind founder Deepak Shenoy has questioned Donald Trump’s announcement of creating a “Foreign Revenue Service” to review US trade policy, highlighting the risk of such a move.

Trump, at X, declared his intention to create a system that collects tariffs, duties and revenues from foreign trading partners, saying he would ensure they “pay their fair share.”

“For too long, we have relied on taxing our great people through the Internal Revenue Service (IRS),” Trump wrote. “January 20, 2025 will be the birth date of the Internal Revenue Service. MAKE AMERICA GREAT AGAIN!”

Shenoy pushed back, highlighting the risks of this policy change. “For a long time, the world has sold to the US and taken the dollar in return, effectively buying US government debt so that its banks could lend to American consumers,” he explained.

He warned that altering that balance would have major consequences: “Change that equation and the dollar will be less useful, America will pay more and the debt will be a problem.”

Shenoy emphasized the existing global financial arrangement in which foreign nations exchange goods for dollars, creating a demand for US currency and government debt. This system allows American banks to lend heavily to consumers, effectively subsidizing domestic consumption.

Trump’s proposed tariffs, Shenoy warned, could disrupt that balance, reduce foreign willingness to hold US debt and raise borrowing costs for the government.

The proposal comes as the US faces rising interest rates and escalating borrowing costs, further straining its fiscal position. Higher tariffs could prompt retaliation from trading partners and potentially reduce their appetite for US debt, amplifying financial vulnerabilities.

Trump’s rhetoric suggests a fundamental change: shifting the tax burden from American citizens to foreign trading partners. “It’s time for that to change,” he said, describing current trade deals as “pathetically weak.”