Jordan McGillis of the Institute for Energy Research writes about a plan in Congress for a carbon tariff, and why it would be a bad idea:
Typically, a carbon tariff is used to offset a country’s own carbon-pricing regime on its domestic industry, in which case it can reasonably be called a carbon border adjustment. The European Union has such a policy in place, matching with its Emissions Trading System. The U.S., conversely, has no such unified policy. As the American Enterprise Institute’s Kyle Pomerleau explained in response to the 2021 proposal from Senate Democrats, without a domestic equivalent, a carbon border adjustment is a tariff, plain and simple. “Democratic lawmakers,” Pomerleau wrote, “are considering a proposal to apply the advantages of a border adjustment to current climate policy. The import tax lawmakers are considering, however, is not a border adjustment — it is a tariff.” Until and unless the U.S. enacts its own coherent emissions policy — a related but separate debate — the term “adjustment” will remain a misnomer.
Though Manchin’s gang will explore alternative nomenclature — they will doubtless experiment with “mechanism,” “fee,” “assessment,” and more — the essence of the plan is to discriminate against imports. Despite a certain segment of the Republican Party embracing the idea, few senators are comfortable championing it outright. North Dakota’s Kevin Cramer, a Republican and a vocal member of the gang, took pain to avoid it in his joint Foreign Policy op-ed with H. R. McMaster in December.
Read the whole thing here.