How trade tariffs could help combat climate change

Trump 2019

(Mirah Curzer, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Shang-Jin Wei


As Australia heads toward a federal election on May 18, the national debate on cutting carbon dioxide emissions is heating up. Yet the discussion highlights the limits of what Australia or any other individual country can do to combat global warming. Rather, the world must step up its collective efforts to tackle climate change. And, strange as it may sound, US President Donald Trump’s aggressive trade policies could point to a way forward.

In Australia, the opposition Labor Party wants the country to reduce its greenhouse-gas emissions by 45% relative to their 2005 level by 2030. But achieving this lofty goal would impose high costs on Australians in terms of foregone income and actual taxes – estimated by economist Brian Fischer to be AUD10,000-20,000 ($7,000-14,000) per capita over a decade. Even if Australia manages to cut emissions by this amount, the overall impact would be small, because the country accounts for less than 2% of the global economy.

The Labor Party’s claim that the benefit of the plan would be fewer floods, hurricanes, landslides, and other natural disasters is only half true, because Australian actions alone will not have much effect on the frequency and severity of such events. Enough other countries would have to cut their own greenhouse-gas emissions further to make a difference.

Until recently, the world’s best hope for combating global warming was the 2015 Paris climate agreement, which has been signed by 197 parties, including the world’s two largest cumulative emitters of greenhouse gases (the United States and the European Union) and the leading current emitter (China). All signatories have pledged to meet numerical targets to lower drastically their own emissions relative to a business-as-usual path.

At the time, many thought that the Paris agreement was the limit of what was politically feasible. Yet most climate-change models predict that even if all countries fulfilled their pledges, their efforts would not keep the increase in global temperature below 2°C above pre-industrial levels – the critical threshold beyond which catastrophic outcomes, including higher sea levels and more frequent natural disasters, would become inevitable.

Worse still, the US under Trump has taken a giant step backward by withdrawing from the Paris agreement and pushing for more coal production and coal-fired power plants without carbon-capture requirements. This is doubly damaging: in addition to increasing America’s emissions, Trump has given other countries an excuse to avoid meeting their own Paris commitments.

Leading US progressives such as Democratic Congresswoman Alexandria Ocasio-Cortez have championed a “Green New Deal” based on publicly financed investment. This initiative faces a similar problem to the Australian Labor Party’s proposal: it would impose costs on US firms and households, while the benefits of lower emissions would be diffused around the world.

True, a successful Green New Deal would have a bigger global effect, because the US accounts for about one-quarter of the world’s economy. But even America cannot save the world if other countries fail to take equally aggressive steps to reduce emissions. In fact, others might even emit more, because US actions could reduce the cost of tradable emissions permits.

Ironically, Trump’s own readiness to impose large import tariffs could provide the basis for a new collective approach. Because the US is the world’s biggest economy and possesses enormous political and military power, most countries have to accommodate America’s demands in some way. In that respect, Trump’s tariff wars have “worked” (although whether they are good for the US economy is another matter).

A future US government could perhaps use tariffs, or the threat of them, to push other countries to reduce their emissions more aggressively – especially those countries that are, or will be, sizable contributors to global warming. This would be different from a border-adjustment tax based on the carbon content of the imports, but a way to raise the cost of inaction for countries that are not making sufficient contributions to the global effort.

Such measures might run counter to existing global trade rules. But they could be justified on efficiency grounds, because avoiding the destruction of the planet is good for everyone. Moreover, this approach would be fair if it resulted in all countries sharing the costs of combating climate change more evenly (all of them would share the benefits of a healthier planet).

Ideally, such an initiative would also acquire a legal basis through future reforms of World Trade Organization rules. It would be even better if many countries committed to coordinating their tariff policies to help enforce any agreement on further emissions cuts.

Of course, tariffs are not – and should not be – the only tool for combating global warming. Nonetheless, given the lack of a powerful enforcement mechanism in the current climate agreement, they could be a useful and potentially effective complement to the next round of global climate negotiations. This, however, requires that America has a leader who understands the climate-change threat.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

What people want – ignore at your peril

Global economy: ‘we must do everything possible’ to avoid global ‘fracture’ caused by US-China tensions, urges Guterres

Aid teams respond to escalating southwest Syria conflict: 750,000 civilians are at risk

What happens when you toss your water bottle in the trash?

The European Brain Drain: a truth or a myth?

Tax crimes: special committee calls for a European financial police force

Large parts of the world are growing more fragile. Here are 5 steps to reverse course

‘Emulate his example’ urges UN chief as world celebrates Nelson Mandela: a ‘global advocate for dignity and equality’

Why South Africa is on a path of economic renewal

Can agroforestry save India’s rivers and the farms that depend on them?

Action needed to tackle stalled social mobility

What brands get wrong about China – and how to put it right

Financial inclusion in India is soaring. Here’s what must happen next

Statement by President Tajani on US steel and aluminium duties

European Business Summit 2014 Launch Event: “Energising Industrial Growth”

European Parliament approves more transparency and efficiency in its internal rules

IMF – World Bank meetings: US – Germany clash instituted, anti-globalization prospects visualized

Terrorism ‘spreading and destabilizing’ entire regions, Guterres warns States, at key Kenya conference

Finland must focus on integrating migrant women and their children to boost their contribution to the economy and society

Gender Equality as a platform to improve Medicine

Medicine and mental health: relax, the doctor is a lifelong learner

5 ways to make your organization a great sustainability partner

Unity, regional cooperation and international support needed for Horn of Africa to develop sustainably

Anti-vaccers: does the empty can rattle the most?

UN police officer recognized for protecting vulnerable Somali women from abuse

Rohingya refugee shelters ‘washed away’ in Bangladesh monsoon rains: UN agency

CO2 can be a valuable raw material, not just a climate killer. Here’s how

There is a mental health crisis in entrepreneurship. Here’s how to tackle it

Egypt: The road to hell paved with western advices for democracy

China’s cities are rapidly becoming more competitive. Here’s why

A small group of world leaders are standing together against inequality

UN chief condemns air strike that hit school bus in northern Yemen, killing scores of children

Myanmar doing too little to ensure displaced Rohingya return: UN refugee agency chief

Here’s what you need to know about the UK’s booming second-hand economy

WEF Davos 2016 LIVE: “We need more Schengen but reinforce control!”, France’s Minister of Economy Emmanuel Macron emphasises from Davos

Amid ongoing fighting in northeast Syria, hundreds cross Iraqi border in search of safety

Why impoverishment and social exclusion grow in the EU; the affluent north also suffers

Newly displaced fleeing attacks in northeast Nigeria, top 2,000

We must stop turning a blind eye to the world’s health crises

The next generation is key for a European renaissance

World Population Day: ‘A matter of human rights’ says UN

Toni Morrison: 10 quotes you should know

Why practicing medicine privately at home is still a (difficult) option?

These will be the main cybersecurity trends in 2020

More than four in 10 women, live in fear of refusing partner’s sexual demands, new UN global study finds

Why the fight against nature loss should be a business priority

Four in 10 indigenous languages at risk of disappearing, warn UN human rights experts

Why are the Balkans’ political leaders meeting in Geneva this week?

The Dead Sea is drying up, and these two countries have a plan to save it

We lack a global framework for saving our environment. Here’s how we change that

No more lead in PVC to protect public health, say MEPs

Energy: new ambitious targets on renewables and energy efficiency

These patients are sharing their data to improve healthcare standards

5 technologies that will forever change global trade

The global economy isn’t working for women. Here’s what world leaders must do

Can self-charging batteries keep us connected for ever? A young scientist explains

WEF Davos 2016 LIVE: Banking moguls continue brandishing financial Armageddon to intimidate us all but in Davos they worry about the very distant future

Germany’s fiscal and financial self-destructive policies

270 million people are migrants, who send home a staggering $689 billion

3 ways Africa can improve the health of women and children

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s