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Trump Pitches External Revenue Service to Collect Tariffs: What to Know

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President Trump has promised to generate a “massive” amount of revenue with tariffs on foreign products, an amount so big that the president said he would create a new agency — the External Revenue Service — to handle collecting the money.“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Mr. Trump said on Monday in his inaugural address, where he reiterated a promise to create the agency. “It will be massive amounts of money pouring into our Treasury coming from foreign sources.”Much about the new agency remains unclear, including how it would differ from the government’s current operations. Trade experts said that, despite the name “external,” the bulk of tariff revenue would continue to be collected from U.S. businesses that import products.Here’s what you need to know about what Mr. Trump has proposed.The U.S. has an established system for collecting tariffs.Tariff revenue is currently collected by U.S. Customs and Border Protection, which monitors the goods and the people that come into the United States through hundreds of airports and land crossings.This has been the case nearly since the country’s inception. Congress established the Customs Service in 1789 as part of the Treasury Department, and for roughly a century tariffs were the primary source of government revenue, counted in stately customs houses that still stand in most major cities throughout the United States, said John Foote, a customs lawyer at Kelley, Drye and Warren.With the creation of the income tax in 1913, tariffs became a minor source of government revenue, and after the Sept. 11 attacks, the customs bureau was moved from the Treasury Department to the Department of Homeland Security.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    ‘So Much Uncertainty’: Businesses Worry About Trump’s Many Tariff Plans

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    The incoming president has floated numerous tariff plans. Retailers say their livelihood could depend on which ultimately come to fruition.For Klem’s, a general store in rural Massachusetts, each year has seemed more challenging than the last.First, there was the pandemic, then a global supply chain breakdown that left the store short of lawn mowers and shoes. Next, a spate of inflation raided American pocketbooks. All along, Amazon continued to pull customers away from brick and mortar stores like Klem’s.Now Jessica Bettencourt, Klem’s owner, says she is facing a new challenge that has left her wondering if the store — which was started by her grandparents in 1949 — will survive. The sweeping tariffs that President-elect Donald J. Trump has promised to impose could raise the price of foreign-made products and cut into her business’s already slim profits, she says.“A huge tariff increase would potentially decimate us,” she said. “A retail store like mine has slim margins to begin with.” It wouldn’t take a whole lot before “all of a sudden, those slim little pennies that you might make are gone,” she said.Mr. Trump comes into office having floated a wide variety of tariff plans. He has proposed a universal tariff on nearly all imports, plus levies ranging from 10 to 200 percent on products from China, Canada, Mexico, the European Union and elsewhere.Mr. Trump has promised to use tariffs for multiple goals: cajoling companies to make their products in the United States, funding tax cuts, persuading other countries to stem the flows of drugs and migrants and even forcing Denmark to cede Greenland to the United States.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Did Trump’s Tax Cuts Do?

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    Economic upheaval caused by the pandemic has clouded analysts’ ability to understand the effects of the 2017 tax law. Republicans call it a huge success and want to extend it anyway.Seven years ago, when Republicans passed the most significant overhaul of the tax code in a generation, they were sure the law would supercharge investment, raise wages and shift the American economy into a higher gear.So did it?The answer, at least for now, is largely lost to history.A pandemic and a surge in inflation convulsed the global economy not long after the law passed in 2017, scrambling the data that analysts would have typically relied on to draw conclusions about whether the tax cuts helped the economy grow the way Republicans had promised.As a result, policymakers in Washington are now relying on only a partial understanding of the law’s past as they weigh committing roughly $5 trillion toward continuing it.“Basically, from 2020 the data is kind of useless,” said Alan Auerbach, an economics professor at the University of California, Berkeley, who counts Kevin Hassett, a top economic adviser to President-elect Donald J. Trump, among his former students.Economists have focused on just two years before the coronavirus pandemic, 2018 and 2019, to measure the law’s consequences for the most important economy in the world. But that’s a limited window for trying to discern whether the tax cuts prompted a cycle of investment and growth that can take years to play out.“In terms of looking at longer-run effects, pretty much just forget about it,” Mr. Auerbach said. “There’s just no way to control for the effects of Covid.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares101 Views

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    CPI Rose in December, a Sign the Fed’s Inflation Fight Has Stalled

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    The Consumer Price Index rose 2.9 percent from a year earlier, but a measure of underlying inflation was more encouraging.Consumer prices rose more quickly in December, the latest sign that the Federal Reserve’s fight against inflation may have stalled.The Consumer Price Index rose 0.4 percent from November, and was up 2.9 percent from a year earlier, the Labor Department said on Wednesday. It was the fastest one-month increase in overall prices since February, driven in part by another sharp rise in the price of eggs and other groceries.The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, was more encouraging: The index rose 3.2 percent from a year earlier after three straight months of 3.3 percent gains. Forecasters had not expected core inflation to slow.Inflation has cooled substantially since the middle of 2022, when it hit a four-decade high of more than 9 percent. More recently, however, progress has slowed, or even stopped outright: By some measures, inflation hardly improved in 2024.“When you step back and look at the overall state of inflation, we’re not really going anywhere,” said Sarah House, senior economist at Wells Fargo. “While there has been progress, the pace has been really disappointing.”Prices continued to rise in some of the categories that matter most to consumers. Grocery prices, which were relatively flat in late 2023 and early 2024, are rising again, led by the price of eggs, which is up by more than a third over the past year. Gas prices jumped 4.4 percent in December, although they were lower than a year ago.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    U.S. Employers Add 256,000 Jobs in December

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    A December gain of 256,000 blew past forecasts, and unemployment fell to 4.2 percent. But markets recoiled as interest rate cuts seemed more distant.Employers stuck the landing in 2024, finishing the year with a bounce of hiring after a summer slowdown and an autumn marred by disruption.The economy added 256,000 jobs in December, seasonally adjusted, the Labor Department reported on Friday. The number handily beat expectations after two years of cooling in the labor market, and the unemployment rate edged down to 4.1 percent, which is very healthy by historical standards.The strong result — unclouded by the labor strikes and destructive storms of previous months — may signal renewed vigor after months of reserve among both workers and businesses. Average hourly earnings rose 0.3 percent from November, or 3.9 percent over the previous year, running well above inflation.“This employment report really crushes all expectations,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “It kind of wipes out the summer slump in payrolls we saw from June to August before the big Fed rate cut in September.”The apparent turnaround in employment growth, however, dampens chances of further interest rate cuts in the coming months. Investors already expect Federal Reserve officials to hold steady at their meeting in late January. For monetary policymakers, the robust growth means that additional easing could reignite prices and stymie progress on inflation.“The Fed is like, ‘We think this is a good labor market, we want to keep it that way, we don’t want it cooling further,’” said Guy Berger, director of economic research at the Burning Glass Institute. “What they haven’t said is, ‘We want to heat the labor market back up.’”Unemployment rate More

  • 138 Shares146 Views

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    Retailers may be taking a more staggered approach to holiday hiring.

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    Every year, retailers race to hire workers to staff their stores and distribution centers to meet the demand that comes with millions of Americans shopping for Christmas and other winter holidays.This seasonal hiring is often seen as a measure of the health of the retail industry and the U.S. economy more broadly.On Wednesday, November data released by the Labor Department showed that seasonal hiring in 2024 in the retail trade sector was lower than a year earlier. But that may also reflect changes in how companies go about it.The struggle to hire workers as the economy reopened in late 2020 and early 2021 led several retailers to start spreading out their hiring throughout the year, relying less on bringing on help rapidly in the weeks immediately before the holiday shopping season. Other retailers have said that they focus on offering their current workers more shifts before hiring seasonal workers.Ahead of the 2024 holiday shopping season, major retailers like Target and Bath & Body Works said they expected their hiring of seasonal workers to be on a par with the year before. Macy’s said it aimed to hire 31,500 workers, slightly down from its target in 2023. Amazon said in October that it would hire 250,000 people to support its fulfillment and transportation operations, in line with its goal from the previous year. At Amazon, the jobs included full-time, part-time and seasonal positions.For retailers, seasonal hiring does not take place just within stores. During the Covid pandemic, as a response to the boom in e-commerce shopping, retailers increasingly focused on hiring people to work within distribution centers that handled online orders.Seasonal hiring has implications beyond December, as many retailers convert a certain percentage of temporary workers to permanent positions. Gap Inc., which also owns Banana Republic and Athleta, said one in 10 of its seasonal workers in 2024 was hired into a full-time position. More than half of Target’s seasonal workers were hired for full-time positions after the 2023 holiday shopping season. More

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    Economists Are in the Wilderness. Can They Find a Way Back to Influence?

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    Economists have long helped to shape policy on issues like taxes and health care. But flawed forecasts and arcane language have cost them credibility.Partway through a panel discussion at a recent economics conference in San Francisco, Jason Furman, a former adviser to President Barack Obama, turned to Kimberly Clausing, a former member of the Biden administration and the author of a book extolling the virtues of free trade.“Everyone in this room agrees with your book,” Mr. Furman said. “No one outside of this room agrees with your book.”The academics and policy wonks gathered in the hotel conference room laughed, but the comment captured something real: After decades of helping to shape policy on weighty matters like taxes and health insurance, economists find that their influence is at a low ebb.Free trade is perhaps the closest thing to a universally held value among economists, yet Americans just voted to return to office a president, Donald J. Trump, who has described tariffs as “the most beautiful word in the dictionary” and who often seems to view trade through a mercantilist lens that the field has considered outdated since the days of Adam Smith.The president he will replace, Joseph R. Biden, was hardly a free-trade zealot himself: He kept in place many of the tariffs that Mr. Trump imposed in his first term, and moved in his final days in office to block the takeover of U.S. Steel by a Japanese company — a decision his own economic advisers opposed.It isn’t just trade.Economists overwhelmingly favor immigration as a source of innovation and growth, yet Mr. Trump wants to seal the border and deport potentially millions of unauthorized residents.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Chose 8 Economic Experts Who Will Defend Tariffs and Lower Taxes

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    President-elect Donald J. Trump has moved beyond the team-of-rivals approach from his first term and chosen economic aides who will defend tariffs and tax cuts.Alan RappeportAna Swanson and President-elect Donald J. Trump put economic policy at the center of his campaign and, in assembling his economic team, has turned to a group of Wall Street executives, economists, lawyers and academics to help carry out his plans to cut taxes, impose tariffs and slash regulations.In contrast to his first term, when Mr. Trump installed advisers who had disparate views about areas like free trade and tariffs, the men the president-elect has selected this time around have, at least for now, professed to be in sync with his agenda.Still, it remains to be seen how well his advisers work together and whether those with more traditionally conservative views will be willing to go along with Mr. Trump’s unconventional approach to economic policy.Scott BessentTreasury SecretaryStefani Reynolds/BloombergWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 75 Shares73 Views

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    Can Low Unemployment Last Under Trump?

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    Hiring has slowed, but joblessness remains at levels defying economic norms. Big policy changes under a new administration could test that resilience.For a time, not too long ago, it was the central question animating economic forecasts and bets laid by investors in financial markets: Will the U.S. economy avoid a recession?Now, for many in the business world, that question feels almost passé, part of an earlier, more fretful era of narratives.After a superlative run of hovering below 4 percent for more than two years, the unemployment rate — at 4.2 percent — has ticked up since last spring. But only by a bit so far; the December reading will come on Friday. While hiring has slowed, layoffs remain low by long-term standards.Inflation, having calmed substantially, is still being eyed warily by the Federal Reserve, which began steeply raising interest rates in 2022 to combat price increases. But at three consecutive meetings in the final months of 2024, the Fed slightly lowered the key interest rate it controls — an attempt to surgically take some pressure off commercial activity and support employment.Predictions of a downturn, once omnipresent, were mostly absent from the year-ahead forecasts that major financial firms typically send around to clients over the holidays.Near the start of 2024, Jeremy Barnum, the chief financial officer at JPMorgan Chase, told listeners asking about U.S. economic vitality during a conference call, “Everyone wants to see a problem — but the reality is we aren’t seeing any yet.”

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    Unemployment rate
    Note: Data is seasonally adjustedSource: Bureau of Labor StatisticsKarl RussellWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More