The Blubber

Trump Administration Outlines Plan to Replace IRS With Tariffs

New details have emerged regarding the Trump administration’s alleged plans to eliminate the Internal Revenue Service (IRS) and replace it with tariffs to boost economic growth.

Commerce Secretary Backs IRS Abolition

Commerce Secretary Howard Lutnick reinforced the administration’s goal during an appearance on "Jesse Watters Primetime" on Wednesday.

“The president’s goal is to abolish the IRS and make outsiders pay,” Lutnick stated.

Speaking on "America’s Newsroom" the next day, he expanded on the plan:

“Reciprocal tariffs—either other countries lower theirs, or we raise ours. Matching their rates could generate $700 billion annually, eliminating our deficit, lowering interest rates, and triggering an economic boom.”

Trump’s Vision: ‘External Revenue Service’

Last month, President Donald Trump unveiled a proposal for an "External Revenue Service", which would replace federal income taxes with revenue collected from tariffs.

Trump has repeatedly spoken about returning the U.S. economy to a pre-1913 model, before the federal income tax was introduced, when tariffs were the primary source of government funding. However, economists have raised doubts about whether such a system would be viable in today’s global economy.

Targeting Untaxed Industries

Lutnick pointed to several examples of industries where he claims foreign entities evade taxes, promising that Trump would end these loopholes:

“Under Trump, these taxes will be collected, and Americans’ tax rates will drop. His goal is to balance the budget while cutting taxes,” Lutnick said.

How Would Tariffs Replace the IRS?

Currently, tariffs are import taxes paid by U.S. importers to U.S. Customs and Border Protection (CBP). The U.S. has already implemented broad tariffs on Chinese exports and avoided a 25% tariff dispute with Canada and Mexico through trade negotiations.

Trump’s plan would dramatically expand tariff-based revenue collection, aiming to replace the IRS and shift the tax burden onto foreign goods and businesses.