Posted on 16 Jan 2025
U.S. President-elect Donald Trump on Tuesday announced on his social media plans to establish the External Revenue Service (ERS), a new agency focused on collecting tariffs, taxes, and other revenues from foreign entities. Trump is expected to formally announce the initiative on January 20, the day of second-term inauguration.
Trump criticized past trade policies, claiming they taxed the U.S. economy while promoting global growth. "It's time for that to change," he stated, emphasizing plans to enforce more aggressive trade measures. He previously suggested imposing tariffs of 10% to 20% on all imports, a move analysts warn could raise consumer prices and stoke inflation.
Democratic Congressman Richard Neal dismissed the proposal as vague and reminiscent of Trump's earlier unfulfilled promises. Critics also questioned the need for a new agency, given that the U.S. Customs and Border Protection already handles tariff collection, which contributes less than 2% of federal revenue.
Adding to the market discussion, Goldman Sachs analysts weighed in on the potential impact of new tariffs on the U.S. dollar. On January 13, the dollar index rose above the 110 mark for the first time since November 2022. "We expect the dollar to rally by about 5% over the coming year on the realization of new tariffs and continued U.S. outperformance," wrote strategists including Kamakshya Trivedi. "Even with this upgrade, we still see the risks tilted towards more dollar strength."
Economic experts have warned that higher tariffs could disrupt trade flows and ultimately burden American consumers. Meanwhile, markets remain cautious about the potential implications of Trump's trade policies despite his strong backing from Wall Street leaders.
Source:Mysteel Global
