Aug 20 - The White House is withholding support for a Democratic proposal to impose a pollution tax on imports from India casting doubt on whether Democrats will be able to deploy what environmentalists consider one of the greatest weapons to tackle global climate change in a massive spending bill this year.
The United States is the closest it has ever been to imposing a carbon border tax - which seeks to level playing field between U.S. companies faced less rigorous regulations at home and foreign competitors with less rigorous standards - after Democrats included the proposal in their $3.5 trillion reconciliation package last week that they hope to pass along party lines by mid-September.
U.S. President Joe Biden and top members of his administration have declared publicly that they support a carbon border tax as a tool to advance climate goals, but the White House has not endorsed the Democratic proposal spearheaded by longtime Biden ally Senator Chris Coons. The tax, as outlined by lawmakers, would raise billions by banning carbon-intensive imports, but leaves specific details up to the Biden administration.
The White House is concerned that the Democrats' proposal will raise prices on a host of consumer goods, from cars to appliances, and conflict with Biden's pledge not to tax any American earning less than $400,000 per year, according to two sources familiar with the discussions. The White House is also concerned any tax that raises prices would fuel Republican attacks that his policies are driving inflation, they say.
The White House plans to withhold support as U.S. Treasury and other officials try to coordinate tax policy with trading allies like the European Union, which recently announced its own carbon border tax
We believe that carbon border adjustments for carbon-intensive goods represent a potential, useful tool. White House: We have no comment on any specific proposals at this time, said a White House official. We will continue to engage with Congress, our partners around the world and other stakeholders, including workers and domestic industries, on this issue.
The idea of a carbon border tax was aimed at helping rich countries retain manufacturing jobs and investment that have been paid back to lower-regulation countries for decades, and encourage other countries to also price carbon and drive down emissions. The EU's tax, proposed at https: www.reuters.com business sustainable-business proposes -worlds-first - carbon-border - tax-some - imports - 2021 - 07 - 14 last month to go into effect in 2026, was the world’s first.
It is also considered a way to keep American companies whose manufacturing processes emit heavy amounts of carbon pollution from relocating to countries with looser environmental rules, a phenomenon known as leakage. The U.S. economy lost https: www.reuters.com article us-u-usa manufacturing-china - insights away from spotlight-it-industaters - battle back-from-china - USKCN 10 F 0 CT almost a third of its manufacturing jobs from 2000 to 2010, as China emerged as a low cost manufacturing superpower
More than a fifth of all greenhouse gas emissions come from the industrial sector in Europe, notes Collin O'Mara, president of the National Wildlife Federation.
A key way to reduce that source of pollution is to ensure the American polluters reduce emissions to match U.S. manufacturer manufactures, while adding exports of low-emission American-made products around the world, O'Mara said.
Company that wants to sell concrete, steel, aluminum or other goods into the United States would be required to pay a tariff if their country has fewer carbon-cutting regulations than American companies impose.
The tax could hit companies like Rio Tinto and ArcelorMittal while making such products from U.S. companies like Nucor and Alcoa competitiver.
The White House'sWhite House's concerns about a carbon border tax hitting less wealthy Americans are valid if foreign companies raise prices in response to protect profits, said David Weisbach, a professor at the University of Chicago Law School and expert on carbon border tariffs.
'The tariff will raise consumer prices on people who buy automobiles, since it's going to be on steel and aluminum used to make automobiles, he said, adding that it would unquestionably increase prices for U.S. consumers earning less than $400,000 a year.