External Revenue Service (ERS): Trump’s Proposed Tariff Agency Could Impact International Trade

At a glance

• The main takeaway: President Donald Trump has proposed the creation of a new U.S. tariff collection agency that could significantly impact international trade.
• Impact on your business: If established, the External Revenue Service (ERS) could trigger new regulatory compliance and reporting requirements for international businesses, along with a host of other changes.
• Next steps: Information about the creation of the ERS beyond President Trump’s initial proposal remains unclear. As more details are released, contact Aprio’s International Tax Team for additional guidance.

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The full story:

President Donald Trump recently declared his intention to develop a U.S. tariff collection agency that could impact international trade: the External Revenue Service (ERS). While the ERS is still in the nascent stages and key details regarding its functionality are unclear, it is expected to trigger several international trade reforms and compliance requirements and could ultimately reshape the impact of tariffs on businesses. 

At Aprio, we are committed to supplying you with information and education about proposed regulatory changes that could affect your business. As news and updates related to the ERS unfold, our team can assist both international and domestic businesses in navigating and complying with new tariff regulations. Until then, here is a preliminary overview of what we know about the ERS so far.

What is the External Revenue Service (ERS)?

According to President Trump, the External Revenue Service (ERS) will “collect tariffs, duties, and all revenue that comes from foreign sources” into the U.S. Note that at this stage, the ERS is still in development; furthermore, the creation of new government agencies typically requires an act of Congress, so it is unclear on the timeframe and thus enforcement of ERS compliance.

Goals of the ERS 

What is the purpose of the External Revenue Service, and how will it impact international trade? As President Trump and lawmakers build out the agency, there are several key areas Aprio will be watching in the coming months:

Cross-agency operations and functionality 

Since the ERS proposal is breaking news, it is not entirely clear how the agency will function alongside existing agencies like the U.S. Customs and Border Protection (CBP) and the Commerce Department.  

Currently, CBP is responsible for collecting international trade revenue, in addition to broadly monitoring the goods and individuals that travel into the U.S. As we mentioned above, Congress has been historically responsible for the inception of new government agencies, so that factor could impact the administration’s timeframe on any cross-agency collaboration. We will continue to monitor updates from President Trump’s administration as the ERS roadmap is established. 

ERS objectives regarding revenue collection and economic strategy

According to President Trump, the ERS will be responsible for collecting tariffs and duties from foreign entities, with the goal of wrapping its arms around the “…massive amounts of money pouring into our Treasury coming from foreign sources.” Furthermore, President Trump has implied that the ERS will aim to protect domestic industries and promote fair trade practices.

Government efficiency in trade 

President Trump has indicated that the ERS is aligned with his administration’s broader agenda to “streamline government operations.” To help accomplish this agenda item, President Trump has proposed a new presidential advisory commission called The Department of Government Efficiency, which will oversee the ERS’s activities if it is established.

Early ERS implications for international businesses 

While the potential impact of the ERS remains unclear until further details are released, operational adjustments and new layers of regulatory compliance are a few areas where changes could be anticipated. Additionally, there are a host of other implications related to supply chain management, cost management, and resourcing that could impact multinational companies and trade partners. 

Aprio is here to help both individuals and multinational companies stay informed of the latest tariff regulations to help ensure accurate reporting and compliance. In the meantime, please contact Yelena Epova, Partner – International Practice Leader, or Jay Cho, Tax Director – Tariffs and Customs, for more information and to get your preliminary questions answered.

Related Resources 

• International Business Services for Multinational Companies
• Customs and Tariffs Services