Carbon Tax Against U.S. Possibility if U.S. Pulls Out of Paris Climate

Posted on 03/09/2017 10:26 AM

Mixed views on whether tax would materialize or if U.S. companies/states might pursue climate goals even if US pulls out of deal

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Countries may opt to impose a carbon tax on goods from the U.S. or take other actions that could negatively impact the U.S. if the country pulls out of the Paris climate accord, a situation that could post major challenges for the U.S. ahead.

The discussion on a potential carbon tax or other actions against the US has arisen with the victory of Donald Trump in the U.S. presidential election and his pledge to pull the U.S. out of the Paris climate deal.

Asked about the potential for countries to take such actions, U.S. State Department climate envoy Jonathan Pershing said, "In my discussions so far, I think people are holding judgment about what the future will hold and will make some decisions following further information from the new administration as to what actions they would take." He noted during a press conference in Marrakesh, Morocco, "What I do know, however, in addition is that [other countries] have also cited and stressed the importance of the issue, and I think that importance will drive their actions both domestically and with respect to the new administration."

Former French President Nicholas Sarkozy is pushing the idea of a border carbon tax to blunt any action by Trump to exit the climate deal. "I will demand that Europe put in place a carbon tax at its border, a tax of 1-3 percent, for all products coming from the United States, if the United States doesn’t apply environmental rules that we are imposing on our companies,” Sarkozy, also now a presidential candidate in France, told TF1 television station Nov. 13.

But such a push by Sarkozy may be met with resistance even within Europe, as Germany and the European Commission on November 14 rejected a call for Europe to impose taxes on imports from the United States if Trump pulls the U.S. out of the deal. "Germany has decided not to go down this path but opt for emissions trading," German Environment Minister Barbara Hendricks told a news conference.

Further, EU Climate Commissioner Miguel Arias Canete told reporters, "We have always said we didn't like carbon taxes - both before the U.S. election and after. The European Commission is not thinking of any proposal on a carbon tax."

Meanwhile, Pershing said other countries will still push forward on the Paris agreement regardless of what the U.S. does.

Oldag Caspar, team leader for German and EU low-carbon policy at Germanwatch, told Deutsche Welle (DW) that nothing has been decided yet and there was still a chance the US may not exit the deal. "Since Trump's election, we've seen a lot of strong voices coming out of the U.S. that are calling for more climate protection," Caspar said. He pointed to a coalition of U.S. companies that made a push to the incoming Trump administration November 16 to continue with the U.S. climate policy and not pull out of the Paris deal.

"So even if the new U.S. government were to start a destructive climate policy, it is likely that individual U.S. states, corporations and the people will continue their efforts to keep global temperatures well below 2 degrees," Caspar said.


Comments: While the concept of a carbon tax against the U.S. is being discussed, it is not clear yet that such an action will gain traction, particularly with the European Commission and Germany both opposed to the concept. But the possibility could have far-reaching negative effects for the U.S. on the export side depending on the level and on what products any carbon tax would be applied. It would present yet another challenge for U.S. exports as the strong rise in the U.S. dollar index since the U.S. election will create headwinds for U.S. exports to foreign buyers.


NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.



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