Trump's New Plan to Abolish the IRS

[00:02] abolish the IRS is progressing. Why? Over the last few days, he has renewed or increased tariffs on dozens of countries around the world. And he says that this is his way to potentially replace the IRS, or at least the income

[00:17] replace the IRS, or at least the income tax, with the ERS, which is the external revenue service, the entity that collects tariff income. So, in this video, I want to go over how we are coming with this idea of potentially

[00:29] replacing the income tax or the IRS with tariff income. Number two, I want to go because President Trump has been talking about this a lot recently. And number means for you, your dollar, and inflation. So, let's break this down.

[00:46] President Trump has been talking about replacing your income tax or the IRS with the ERS. The idea being you go to work every single day, you get paid, but money. This is the income tax, which is then collected by the IRS. At the same

[01:01] time, President Trump has passed many tariffs on countries around the world. That way, if you or a business buy something from China, you now have to pay a tax to bring that product from China to the United States.

[01:13] The hope is this will incentivize people to make their goods in the United States instead of China. But in the meantime, what that means is now we're also collecting this tariff income, this tax. And President Trump has been talking

[01:26] about how this tariff tax could potentially replace the income tax or potentially replace the IRS. So, let's see how things are going, because we now time. What we know is that the income tax,

[01:42] work, brings in around $2.6 trillion. It's It's about half of our total taxes in the IRS, but the income tax brings in $2.6 trillion by itself. In 2024, before President Trump passed

[01:59] these tariffs, tariff revenue brought in $79 billion. tariff revenue brought in $79 billion. In 2025, tariff revenue, now we have the In 2025, tariff revenue, now we have the numbers, it brought in $264

[02:12] billion, which means tariff revenue essentially 4x'd between 2024 and 2025. revenue that we have seen in many, many years, but it's about 1/10 of how much

[02:25] taxes we collect from the income tax. So, it doesn't look like tariff revenue can replace the income tax or the IRS anytime soon, unless we can 10x our tariff revenue. That being said, President Trump says

[02:40] that he is going to renew and increase tariffs on many countries around the world because he is concerned about this thing called a trade deficit. Now, what this trade deficit means, there's a number floating around, $900

[02:54] billion. And that number says that Americans are spending $900 billion more on other countries than they're spending here. Meaning, we in the United States are spending more money buying stuff from

[03:08] United States. We in the United States Canada's buying from the United States. We in the United States are buying more stuff from China than China's buying from the United States, and this is what

[03:20] President Trump says unfair and is creating this trade deficit. Now, the President Trump is looking at it economically. We are taking our dollars here in the United States, and now we're taking these dollars and taking them to

[03:34] foreign countries like Canada and Mexico and China, and we're giving them our dollars so that we can get cars, so we can get food, so we can get other And then they get the dollars, which is the asset.

[03:49] want to flip this. We want to protect our jobs. Because if we now make it more expensive to produce products in Canada, Mexico, China, and dozens of other countries, businesses are going to say, "I don't

[04:05] Mexico, or China. I want to produce those products in the United States, United States." Which is great. The advantage of producing something in China is that it's cheaper.

[04:21] So when we manufacture outside of the United States, we get cheaper stuff. When China entered the manufacturing industry

[04:33] for the United States, the United States lost about a million manufacturing jobs. That was our cost to shipping factories to China. Our gain was we got cheaper stuff. TVs got cheaper,

[04:47] radios got cheaper, cars got cheaper, sofas got cheaper, clothes got cheaper, but we lost jobs. And now President Trump is saying we want to flip this. We want to now bring those jobs back here

[05:02] and potentially face the higher prices. So it is a jobs versus prices thing that President Trump is deciding between, and he wants to States. But the other reason why this matters so

[05:17] much has to do with investments. Because remember what I said just a minute ago, that we are taking our United States dollars and then giving them to Mexico, Canada, China, and dozens of other countries, and we get cars, we get

[05:29] lumber, we get food, but they get the dollars. dollars is then they take those same United States dollars and then invest them in United States assets, which means President Trump is saying that

[05:43] they're getting rich by our dollars, while we are becoming poorer. Now, what does that mean specifically? And why does this matter to you? Because this has a direct impact on you, your mortgage rate, your

[05:56] inflation rate. It's because when many of these countries get dollars, which is remember the world's strongest currency in the world, it is the world reserve they want to take these dollars and invest it.

[06:09] And the safest place in the world, according to any economics textbook, to invest that money is into United States Treasuries. And so, Canada, Mexico, China's a net seller of Treasuries right now, but many

[06:23] those same dollars and then they're buying up United States And which means we have a lot of non-United States owners of our United States debt.

[06:38] they're getting interest off of our United States debt. And they're getting richer from our United States debt because we keep spending money that we don't have. But there's a benefit to you. Now, when

[06:51] I say United States debt, what that means is every year our government collects five-ish trillion dollars of taxes. We said $2.6 trillion is from the income tax. We get another

[07:04] two and a half trillion dollars from other taxes. So, the government collects about five trillion dollars in taxes, and then the government goes out and spends all five trillion dollars. And then they spend an additional two

[07:16] trillion dollars because we have a spending problem in spends a lot more than we generate. So, the government's going to spend about only have about five trillion dollars of taxes, and the way that the government

[07:30] now [snorts] can spend that additional money is through debt. So, they can or they can borrow this money from foreign countries, like Canada and Mexico, and the United Kingdom, and

[07:43] And they can also borrow that money from our central bank, the Federal Reserve that in this video because that gets a little bit confusing, but just know that we have all these foreign countries now that are owning our United States debt.

[07:57] States dollars, because remember the United States dollar is the world's dollars because we are giving them the dollars because we're buying their dollar and then reinvesting it back here.

[08:11] And this is where President Trump wants them to get less dollars from us, or at least them buy more stuff from us to strengthen our economy. But why does this matter to you, and how

[08:24] does this impact your money? How does this impact your inflation? And how does it impact your mortgage rate because it has a direct impact on you and your talk about investing

[08:38] is moving. And I teach a concept called ABB, always be buying, as a way to build wealth through the markets. I have a free ebook on this as well. It's called ABB, how you can build wealth in any market. If

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[09:20] Now, the reason why this whole system impacts you is because impacts you is because when we have more buyers of United States debt, interest rates on our debt goes down.

[09:35] Think of it like supply and demand. The United States government needs government's going to always keep spending more money than what they bring seeing for a very long time. It's not going to stop.

[09:49] >> [snorts] >> So, the government is in need of debt. >> So, the government is in need of debt. And when everybody is saying, "United dollars." The government says, "Well,

[10:03] we have so many options to borrow money. We don't need to offer such a high interest rate. Because people will lend us money even of the things that I've learned in life

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[11:26] description. So, when there's a lot of buyers of United States debt, the United States gets to offer lower and lower interest on their loans. cheap. I mean, when you go and get a mortgage or a car loan or anything,

[11:43] So, it's the same with the government. rate. And so, when there's a lot of people with dollars that want to buy this United States debt, that lowers our Treasury rate, meaning the

[11:56] interest rate that our government has to pay. Now, why does it impact you? government pays, called the Treasury rate, rate, this is the baseline for every loan in

[12:10] the United States. Remember what I said a minute ago? That every economics textbook says that the safest investment is United States debt. The reason why it says that is because

[12:22] the government always pays their bills. raise your taxes. Or number two, they can work with the Federal Reserve Bank bills. So, yeah, they can always pay their

[12:34] bills. Yeah, it might cause inflation, but they can always pay their bills. now I want you to put yourself in the shoes of Chase Bank.

[12:46] Bank. Your broke cousin, Bunty, wants to get a credit card from Chase Bank. And Chase Bank is sitting on a pile of cash. And now they're comparing their investment options.

[12:59] Who are they going to say is more risky? You or your broke cousin, Bunty? Well, your broke cousin, Bunty, has a horrible credit score. time. So, he's more risky as an investment. So, for Chase Bank to give

[13:14] loan, they're going to want a better rate of return. They're going to want a higher interest rate. They might charge your broke cousin, Bunty, 25% a year to borrow money because he might not pay that money back. You got a stable job.

[13:27] You got a good credit score. You're more likely to pay your money back. So, maybe for your mortgage, they're only going to charge you 6 and 1/2%. Because you're less risk than your broke cousin Bundy. But then we have

[13:41] And player number three is the United States government. Because now Chase Bank says we can also, instead of just lending we can also lend money to the United States government.

[13:56] risk-free investment. We don't care about the government's credit score cuz the government always pays the bills. You might lose your job. The government money. So, the government is going to get the

[14:10] lowest interest rate. But Chase Bank doesn't set the interest rate that the government pays. That's set by the government. So, if the government is raising interest rates,

[14:22] then you are going to have to pay a higher interest rate. Because if the government is paying 6%, why would Chase Bank charge you 6%? They would just take because the government is risk-free. You could lose your job. You are more risky.

[14:38] could lose your job. You are more risky. And so, as Treasury yields go up, mortgage rates go up, car loan rates go up, credit card rates go up. As Treasury yields go down, mortgage rates can go down,

[14:52] credit card interest rates can go down, car loan rates can go down. You get the idea. So, when there are more buyers of this United States debt, Treasury yields go down, your mortgage

[15:04] rate can go down. If there are no buyers of this Treasuries, United States debt, yields go up, mortgage rates go up, car and you have to pay more money on your debt.

[15:18] yes, this can impact inflation as well because if the cost of producing things go up, you have to pay more money eventually. I of these tariffs,

[15:31] every business can do it forever. And so, if a business has to produce or have to pay 10% more to produce the that generally means that when you go and buy something, you have to pay more

[15:45] beginning of the video, that when we moved our manufacturing to China, we lost jobs, but we got cheaper stuff. And if we try to tariff foreign countries, we are trying to grow jobs,

[15:59] but we lose the cheap stuff. We have to pay more money for stuff. that's what you're going to pay attention to. Now, why does that matter with everything else? Because if inflation is

[16:11] higher, Federal Reserve Bank comes in, and they rates. We might have to raise interest rates." Which also then means it's harder to see lower mortgage rates, it's harder to see lower credit card rates.

[16:24] So, that's the dilemma that's happening right now. Hopefully, this video helps trade deficit, because it's probably going to be a bigger and bigger topic in because it's been very popular with President Trump talking about it, with

[16:39] all these changes happening with tariffs. So, I want you to pay attention And hopefully, this video helps you understand what's going on in the world have a free ebook for you down in the

[16:52] you got value out of this video, the best thank you is a referral. a friend, family member, colleague, or fellow investor, that way we can financial education. Thank you. Every stock market analyst on Wall Street says

[17:06] that the stock market should be crashing. We have a full-blown war going crashing. We have a full-blown war going on. Oil prices are skyrocketing. The job market is down, and tariffs are coming back strong. But despite all of these

[17:20] things, the stock market keeps breaking brand new record highs. In fact,