Europe recently introduced a carbon tax. The proposed PROVE IT Act would lay the groundwork for one in the United States. Over in the Washington Examiner, my colleague Daren Bakst and I explain why carbon tariffs would have serious unintended consequences and have almost zero effect on carbon emissions.
One problem is that it would devolve into protectionism:
It’s also naive to believe carbon tariffs, in practice, would actually be about the environment. Countries would game tariffs to their own advantage and could easily do so because of the sheer complexity and likely impossibility of developing a system that properly accounts for global production and supply chains.
Another problem is regulatory sovereignty:
If the carbon tariff infighting ever gets resolved, other countries would gain significant input into U.S. lawmaking by using tariffs to trigger changes to American domestic policy. This would likely lead to massive new regulations or taxes — otherwise, carbon tariffs would be imposed against U.S. imports.
Read the whole piece here.