Donald Trump has pledged to create an ‘External Revenue Service’ when he enters office which will collect tariffs, duties and revenue from foreign sources.
The president-elect renewed his commitment to institute universal tariffs of 10 per cent to 20 per cent on all imports from all countries, with tariffs as high as 60 per cent to 100 per cent on Chinese goods, suggesting that he will lower taxes in the US as a result.
Posting on his social media platform, Truth Social, Trump wrote:
“For far too long, we have relied on taxing our Great People using the Internal Revenue Service (IRS).
“Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves. It is time for that to change.
“I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.
“We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!”
Tariffs could have significant consequences for inflation and the economy, as well as the global economy.
The Congressional Budget Office, a nonpartisan, official expert source for budgetary and economic matters for Congress, estimates tariffs could increase the personal consumption expenditure index, a measure of inflation, by approximately 40 per cent from its most recent (November 2024) level of 2.4 per cent, while slowing US GDP growth by 0.6 per cent.
Britain, meanwhile, could find itself wedged between high tariffs in America and self-imposed trade barriers with the EU, which the Institute for Public Policy Research (IPPR) says calls for a new trade strategy.
Between 2021 and 2023, estimates suggest that EU goods imports to the UK were down by 32 per cent and UK goods exports to the EU were down by 27 per cent compared to what would have happened if the UK had not left the EU.
While other G7 countries will have seen an average 5 per cent increase in goods exports by the third quarter of 2023 compared to 2019 levels, the UK experienced a 10 per cent decline by the end of 2023, suggesting a re-think is needed.
Marley Morris, associate director at IPPR, said: “With Donald Trump’s inauguration just days away and the government intent on a ‘reset’ with the EU, the time is ripe for a new UK trade strategy.
“The challenges are stark: declining goods exports, damaging barriers with the EU, and a turbulent global economic landscape. But a new strategy should help develop a new programme of export support, rebuild UK-EU trade relations, and modernise our approach to trade agreements.
“The new Trump presidency is particularly delicate for the UK. The government will need to on the one hand offer an olive branch by signalling appetite for an ambitious trade deal, while at the same time strengthening the UK’s trade defences to brace for a potential tariff war.
“With the right focus on boosting green growth, securing economic resilience, and rebuilding vital relationships, the UK can turn the tide and reclaim its place as a leader in global trade.”
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