President-elect Trump announced plans on Tuesday to create a new “External Revenue Service” that would be tasked with collecting tariff revenue, but economists are pushing back, pointing to US importers bearing the brunt of the tariffs’ cost rather than the companies abroad.

“For too long, we have relied on taxing our big people through the Internal Revenue Service (IRS). Through soft and pathetically weak trade deals, the American economy has brought growth and prosperity to the world, while we we impose on ourselves. It’s time for that to change,” Trump wrote in a post on the Truth Social platform.

“Today I announce that I will create the EXTERNAL REVENUE SERVICE to collect our fees, duties and all income from foreign sources. We will start charging those who make us money with Trade, and they will FINALLY start paying their fair share. January 20, 2025 will be the birthday of the External Revenue Service,” he added.

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). That dynamic has drawn pushback from economists who say the proposed External Revenue Service name represents an effort to obscure who pays the tariffs.

TRUMP DENIES REPORT ON CHANGES TO TARIFF PLANS

President-elect Trump said he plans to create the “Foreign Revenue Service” to collect tariffs paid by US importers. (Bill Pugliano/Getty Images/Getty Images)

“The president-elect may try to market his higher-tariff agenda as an external tax, but the messaging doesn’t change that higher rates it will be paid by people and businesses in the United States who import goods,” 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 income. Higher tariffs will create a drag on the US economy and threaten to offset the benefits of tax cuts elsewhere, should not be relied upon as a primary source of tax revenue,” York explained.

TRUMP’S PROPOSED TARIFFS: WHICH CONSUMER PRODUCTS COULD BE IMPACTED?

President-elect Trump, seen here with Canadian Prime Minister Justin Trudeau, who recently announced his resignation, campaigned on imposing tariffs on American trading partners. (Dan Kitwood/Getty Images)/Getty Images)

Scott Lincicome, vice president of general economics at the Cato Institute, expressed a similar sentiment, telling FOX Business: “The agency name is more of a brand than a substance, and a misleading brand. In the vast majority of cases , the holidays in the United States.—not foreign (‘external’) sources—pay the US tariffs and, as several recent studies confirm, bear their economic impact as well.”

“Therefore, declaring tariff revenue ‘external’ would be as misleading as, say, declaring domestic sales tax revenue ‘external’ because it applied to a foreign-made good sold at your local Walmart. Al at the end of the day, Trump could call it “Foreigners Paying the Tariff Agency,” and it still wouldn’t change the fact that Americans really are,” Lincicome said.

GOLDMAN SACHS: TRUMP TAX CUTS, DEREGULATION WILL BOOST GROWTH; FEES CAN BE A RISK

In most cases, importers pay the fees to US Customs and Border Protection at the point of entry into the country. (Photo: Luke Sharrett/Bloomberg via Getty Images/Getty Images)

During his successful campaign to return to the White House, Trump announced his plans to impose a general tariff 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 from Canada and Mexico, which are part of the US-Mexico-Canada Agreement (USMCA) – a free trade agreement that Trump negotiated during his first term as the successor to the North American Free Trade Agreement (NAFTA).

his campaign platform included fare revenue as a source of tax revenue to offset proposed tax cuts and spending plans.

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Trump will be inaugurated for his second term as president on Monday, January 20. His transition team has indicated that he plans to sign a roster of executive orders upon taking office, as the new presidential administration often does.

Trump’s social media post suggests the External Revenue Service will be created Inauguration dayalthough the details of whether this will be done through an executive order and how the new agency plans to operate are unclear at this time.