Senate Finance Committee Chair Says Carbon Tariff Under Development
Much work remains to be done to create a concrete proposal on levying tariffs on imports from countries that are not as aggressive as the U.S. is about battling climate change, Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a brief Capitol hallway interview Aug. 10. Such a tariff is planned as a pay-for in the upcoming spending bill for education and daycare, income support, health care, housing and environmental priorities. "People have asked, 'What is this really all about?'” he said. "We have defined this as making sure that, as our workers and our manufacturers push very hard to modernize our infrastructure, make it greener and cleaner, that other countries don't undercut our workers and manufacturers. That is the philosophical foundation."
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In July, a bill was introduced in the Senate by Sen. Chris Coons, D-Del., that would tax imports in five sectors (see 2107200028), but Wyden did not answer a question on whether the carbon tariff, as he called it, would be limited to cement, steel, aluminum, iron and fossil fuels, as Coons' bill laid out. In Coons' bill, goods in those sectors, or other products that are more than 50% made from these metals, fuels or cement, would be taxed, starting in 2023, if the exporting countries are less ambitious than the U.S. is in reducing greenhouse gases -- but only if the countries aren't imposing a carbon border adjustment tax against U.S. exports.
That bill says that other goods could be added to the system as methodology for estimating the fossil fuel needed to make them improves over time.
"I've talked to Sen. Coons about it," Wyden said. He noted that any carbon tariff has to get support from all 50 Democrats. Sen. Joe Manchin, D-W.Va., represents a state where mining is the third-largest industry, and coal makes up 80% of what is mined. About a third of West Virginia coal is exported, primarily to make steel in countries like India and Brazil.
He also said he wants to make sure that whatever is done on the carbon tariff does not raise taxes on households making less than $400,000. Many analysts have called a carbon tariff without a domestic carbon tax unworkable. A domestic carbon tax would raise costs for all consumers. Another bill that proposes a carbon border adjustment tax and a domestic carbon tax, would rebate households with adjusted gross income of $150,000 or less.
Coons told International Trade Today that he doesn't know if his bill will be the starting point for the Finance Committee approach. "I'm hopeful that he'll seriously consider it," he said of Wyden.