President-elect Donald Trump on Tuesday said he will create an External Revenue Service on the first day of his presidency to keep track of tariff payments and revenue flowing into the U.S. from foreign sources.

Mr. Trump, writing on Truth Social, said “for too long” the U.S. has relied on American taxpayers for money to fund its programs.

“Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves,” he said. “It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.”

Tariffs are a form of tax or duty paid on imports. Mr. Trump says tariffs are a great way to force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs.

The U.S. relied on tariffs as a primary source of government revenue until the federal income tax was imposed in the early 20th century.

Mr. Trump’s idea to create the ERS underscores his belief that tariffs are a revenue generator and not a narrow tool to protect certain domestic industries.

“We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!” Mr. Trump wrote.

Sen. Ron Wyden, the top-ranking Democrat on the Senate Finance Committee, said Mr. Trump’s idea was silly.

“No amount of silly rebranding will hide the fact that Trump is planning a multitrillion-dollar tax hike on American families and small businesses to pay for another round of tax handouts to the rich,” said Mr. Wyden, of Oregon.

Some economists are skeptical about using tariffs as a revenue generator.

Despite Mr. Trump’s assertion, foreign countries don’t pay the tariffs directly to the U.S. Treasury. Companies pay the levies and often pass at least some of the cost to consumers through higher prices.

The Competitive Enterprise Institute, a libertarian think tank, says tariffs protect domestic industries, resulting in reduced competition and higher prices for consumers.

“In order for government to raise $1 million from steel tariffs, consumers have to pay about $3 million more for cars, housing and other steel-using goods, and most of that money is corporate welfare,” the enterprise wrote in a blog. “Tariffs are incredibly inefficient, even by Washington standards.”

• Tom Howell Jr. can be reached at thowell@washingtontimes.com.