Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has expressed concerns regarding US President Donald Trump’s announcement to establish an external revenue service to impose taxes and tariffs on foreign countries.
During his inauguration speech on Monday, President Trump announced the creation of an external revenue service to collect tariffs from foreign countries exporting goods to the United States.
“I will immediately begin the overhaul of our trade system to protect American workers and families. Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump stated.
“For this purpose, we are establishing the external revenue service to collect all tariffs, duties, and revenues. It will be massive amounts of money pouring into our treasury, coming from foreign sources. The American dream will soon be back and thriving like never before, to restore competence and effectiveness to our federal government.”
Possible disruption of international trade
Reacting to Trump’s statement on his X handle, Oyedele noted that this move could disrupt international trade and further complicate the already complex global tax system.
“Today (June 20), the 47th President of the United States, Donald J. Trump, announced plans to establish an External Revenue Service to impose tariffs and taxes on other countries.
“This move could disrupt international trade and further complicate the already complex global tax system, highlighting the importance of our ongoing tax reforms.”
Regarding how Nigeria can mitigate the impact of this development on its economy, Oyedele emphasized the need for a revamped tax system.
“By revamping our tax system, we can better navigate potential challenges and seize any opportunities this development may present,” he added.
What you should know
Trump’s announcement follows his threat last month to impose 100 percent tariffs on Brazil, Russia, India, China, and South Africa (the BRICS nations) if they create a new BRICS currency or back any other currency to replace the US dollar as the world’s reserve currency.
- Tariffs, with the threat of a potential 25% levy on all goods from allies like Canada and Mexico and 60% on goods from China, have become a benchmark of Trump’s economic agenda as he begins his second term.
- The creation of a new agency requires an act of Congress, and Republicans hold the majority in both the House and the Senate.
- The U.S. Customs and Border Protection, an agency overseen by the Department of Homeland Security, currently collects tariffs, which are paid by importers (not foreign countries). Those importers often pass the added costs of the tariffs onto consumers, driving up prices.
This has raised concerns about spiking inflation if Trump follows through on his campaign threats to impose a universal tariff of between 10 and 20 percent on all imports into the United States, as well as additional tariffs on top trading partners such as China, Canada, and Mexico.
Trump and some of his top advisers have suggested that tariffs could replace the income tax as the main source of revenue for the United States.
