Trump Trade Wars Could Open Doors for Border Carbon Tax
With Donald Trump doing his best to blow up his country’s key international trading relationships, a group of trade and climate experts is resurrecting the idea of a border carbon tax as a way to counter a new wave of economic protectionism while putting pressure on climate laggards.
By confronting “free rider” countries standing against the global trend to put a price on carbon, a border tax would “level the emissions playing field by imposing the same economic burden on domestic and external manufacturers,” states a commentary published Monday in the journal Nature.
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“It’s politically seductive for policy-makers,” said lead author Michael Mehling, a climate and trade specialist at the Massachusetts Institute of Technology (MIT).
“Carbon-based tariffs—known as border carbon adjustments, or BCAs—used to be easy to dismiss out of fear that they would upend the delicate balances of international trade,” InsideClimate News notes, citing Mehling. But with tariffs and retaliatory tariffs now flying in both directions between the U.S. and its major trading partners, “the relationship is soured,” he said. “Now you’re thinking about how best to hit back.”
InsideClimate cites French President Emmanuel Macron and Canadian Environment and Climate Minister Catherine McKenna as senior officials who’ve considered the option in the last year, while “Mexico mentions them in its commitments under the Paris Agreement.” BCAs were also included in the carbon cap-and-trade bill that passed the U.S. House in 2009, but died in the Senate.
Harvard University economist Martin Weitzman said a border carbon tax would be tough to implement in practice. “You don’t know how politically feasible this is already,” he told ICN. “Now you’re somehow marrying this idea of border carbon adjustments on top of highly uncertain Trump tariffs? It seems like a poison mix somehow.”
But Mehling maintained the strategy would be a good way to address climate and trade all at once. “It’s not going to go away,” he said. “If anything, now is a unique confluence of things that makes it a good a time as any.”