U.S. Customs Service

One of the first acts of the new Congress was to tax imports, and the Act of July 31, 1789, set up customs districts, ports of entry, and collectors to gather the duties. Customs collectors in ports such as New York, Boston, and Philadelphia were among the most important federal officials of the early republic, and the job was a prized patronage post. The service operated within the Treasury Department and was formally named the U.S. Customs Service in 1973.

For more than a century customs duties were the largest source of federal revenue, providing most of the government's income until the federal income tax was adopted in 1913. Customs officers assessed and collected tariffs, inspected cargo and travelers, fought smuggling, and enforced trade laws, quotas, and embargoes. In the twentieth century the service increasingly focused on stopping illegal drugs and other contraband, enforcing export controls, and protecting intellectual property, while the revenue it collected became a small share of the federal budget.

After the September 11 attacks, the Homeland Security Act moved the Customs Service to the new Department of Homeland Security on March 1, 2003, where its inspectors were combined with immigration and agriculture inspectors in Customs and Border Protection, and its investigators joined Immigration and Customs Enforcement. The Treasury kept authority over some revenue rules. Supporters said one agency at the border would improve security, while some trade experts said the shift made revenue collection and trade facilitation a lower priority. Tariff collections grew sharply again after 2025, when the administration imposed broad new tariffs collected by Customs and Border Protection.