President Donald Trump boasts that his global tariffs are bringing in “much more money than the country has ever seen,” which he says could help reduce the debt and even pay for rebate checks for American taxpayers.
What Trump no longer mentions is the new agency he once envisioned would be key to implementing those policies: an "External Revenue Service."
The president announced plans to create the ERS in a social media post shortly before his inauguration, which he said would be responsible for collecting “our Tariffs, Duties, and all Revenue that come from Foreign sources.” Trump claimed as recently as Thursday that his tariffs would bring in “trillions of dollars,” and administration officials have said they could one day replace the U.S. income tax as a primary source of federal revenue.
But more than six months later, the new agency is still just a concept, stalled by competing visions for its mission and the fact that tariff revenue has fallen short of the president’s forecasts, according to three people close to the White House.
The neglect of the ERS, which was intended to function as the primary channel for collecting and directing tariff funds, is fueling doubts about whether the administration still plans to turn that revenue into rebate checks, industrial projects or other tangible benefits.
“They haven’t figured out what they want,” said one person close to the White House, who like others quoted for this story was granted anonymity to speak about internal deliberations. But the person added, “There is still an appetite from the administration to re-fashion things and move them around.”
A White House official said the service is still being set up.
“President Trump’s tariffs have already raised billions of dollars, and the Administration remains committed to setting up an External Revenue Service to build on this windfall revenue for the federal government,” spokesperson Kush Desai said in a statement to POLITICO.
Trump continues to talk up the income his tariffs are generating — which the administration says totaled more than $150 billion through July. Asked about that haul earlier this month, the president said, “There could be a distribution for dividend to the people of our country. I would say for people that would be middle-income people and lower-income people. We could do a dividend. But one of the things we’re going to be doing is reducing debt.”
He has not elaborated on how he would carry that out — or who he would tap to lead the effort, after hyping the idea for the ERS in the early months of his second term. Top administration officials have also stopped promoting the ERS in interviews in recent weeks.
“The silence has been deafening,” said one lobbyist, who advises some of the country’s largest companies on customs policies. “Importers have received no guidance and some companies aren’t even tracking [the service] anymore.”
That’s a shift from the administration’s early days, when officials at agencies like the Commerce Department, USTR and Treasury jockeyed to own the project, according to the people familiar with the discussions. Trump initially assigned Treasury Secretary Scott Bessent to lead the project to create the ERS, as part of a Jan. 20 directivetasking him with conducting a feasibility study, in consultation with the Commerce and Homeland Security departments’ secretaries. The details or status of the study have not been made public.
Commerce Secretary Howard Lutnick also took an interest in the ERS, which he viewed as an opportunity to position himself at the center of trade policy, not traditionally a part of that Cabinet secretary’s portfolio, two of the people said. He saw it as a possible means of regaining the foremost position in the administration’s trade policy hierarchy, particularly after a plan to place USTR under the Commerce Department appeared to fizzle. After embracing the idea in the press and in other public remarks, Trump handed the service to Lutnick in the spring, even though a feasibility review of the program was still ongoing, the people close to the administration said.
“Foreign companies are going to pay if they want to come and sell products to the wealthiest country on Earth,” Lutnick said at an inauguration rally on Jan. 21, adding that the ERS will “put up tariffs.”
Lutnick as recently as last week said those tariff collections could hit $50 billion a month and "ultimately reach a trillion dollars" in total revenue, in an interview on Fox Business Network’s "Mornings with Maria."
White House press secretary Karoline Leavitt signaled that Lutnick had taken over the program in March, telling reporters that the Commerce chief is "working very hard on [the ERS] and is quite enthusiastic about [it], if you have noticed from his media interviews."
“I was surprised when they gave it to Lutnick,” said one of the people close to the White House, adding that Trump’s decision was met with skepticism from within the administration. “When they told us they were giving it to him, people were like, ‘Really? Does he actually know what he’s doing with it?’”
Lutnick began to lose interest in the ERS once it became evident that the revenue would fall far short of replacing the income tax. Loftier ideas, such as using the funds to establish a new sovereign wealth fund, failed to gain traction after months of behind-the-scenes discussions, according to two people familiar with the talks and a lobbyist who regularly meets with administration officials.
A Commerce Department spokesperson said the project is proceeding. “There’s definitely been steady progress,” they said, adding that Lutnick and Bessent are working closely together. Lutnick did not respond to a request for comment.
Economists say there’s little chance the administration will generate the “massive” tariff revenue the president has promised. And they reject claims from Trump and other officials that ERS revenue could soon replace income taxes. Federal income taxes reached $2.4 trillion in 2024.
Treasury had considered using the ERS for separate purposes — such as limiting the flow of money across borders or imposing other financial restrictions on trade. But those ideas were put on hold as officials turned their attention to negotiating new trade deals with individual countries, two of the people said.
The department also weighed smaller changes early on, like shifting certain technical authority between agencies or renaming an existing office at the Department of Homeland Security. But even those ideas faced internal pushback. Some career officials warned that reassigning responsibilities across established departments would be complex and that changing the authority of U.S. Customs and Border Protection, which collects the tariffs, would likely require congressional approval, three of the people said.
The lack of progress is a missed opportunity, said John Foote, a partner in the international trade practice at Kelley Drye & Warren.
“There’s plenty of confusing things associated with international trade and customs duty calculation and tariff collection," said Foote. "From the standpoint of most companies importing goods into the United States, one challenge is just simply tracking the exact tariffs that are applicable with respect to any particular imported product."
“We don't really know that the tariff policies are taking one direction or another,” said Pete Sepp, the president of the right-leaning National Taxpayers Union. “Are the tariffs going to raise a lot of money over the long term, or are they going to keep a lot of foreign goods out of the United States? That's the basic question, because tariffs really can't do both for very long.”
Megan Messerly contributed to this report.
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