On Black Friday, government officials released an ominous climate change report. The Fourth National Climate Assessment Report found, in the worst case scenario, climate change could result in significant economic impacts to the U.S. economy by the end of the century.
In dismissing the report, President Trump correctly noted domestic air quality is the “cleanest” in modern history, and any U.S. measures to combat climate change would have little impact other than on our economy, given that Asian powers are not reducing their emissions.
Data from the World Health Organization underscores the president’s point. Overall U.S. air pollution is five times lower than the global average and seven times lower than China. Overall, levels of the six criteria air pollutants for which there are national ambient air quality standards (NAAQS) have declined by 73 percent since 1970. With regard to carbon, total U.S. energy-related carbon dioxide emissions fell by 14 percent from 2005 to 2017, while global emissions grew by 21 percent over the same period, led by China, India, and other Asian countries.
Despite these domestic improvements, there is a growing body of scientific literature demonstrating that significant concentrations of U.S. air pollutants originate from foreign sources. The impact of foreign air pollutants is especially significant on the West Coast, where ozone and particulate matter from Asia and Mexico converge. Indeed, in some parts of the country nearly half of the gains in ozone reduction have been wiped out by trans-boundary pollution from China.
At the core of “America First” environmentalism is maintaining the U.S. as a leader in environmental quality, while simultaneously leveling the playing field. U.S. environmental regulations are effective at reducing pollution, but they are costly. According to the National Association of Manufacturers, environmental regulations cost U.S. manufactures over $10,000 per employee per year. For smaller manufacturers, that number nearly doubles. Conversely, Asian manufacturers have a huge advantage with the near total lack of environmental controls.
Rather than saddle domestic manufacturers and consumers with additional job-killing costs that come with a carbon tax, as some lawmakers have proposed, the U.S. should adopt a Minimum Environment Standards Duty. An MES Duty would be levied on energy-intensive goods and materials imported from countries with environmental controls that fall below existing U.S. standards.
Unlike a carbon tax or even the Paris climate accord, the burden of the MES Duty would fall on those countries that allow industrial sectors to pollute with impunity, rather than on the U.S., which is one of the few countries making significant environmental gains. Last year alone, the United States’ carbon emission reductions were wiped out three-fold China’s increased emissions, and it’s American manufacturers that are paying the price. As the U.S. Environmental Protection Agency moves to implement its revised power plant carbon emissions rule, the MES Duty could apply to both heavy carbon dioxide and the already regulated NAAQS emitting industries.
Conceptually, an MES Duty is nothing new. For decades the Department of Commerce has had the authority to levy countervailing duties on subsidized imported goods. Given the high cost of environmental regulations on manufacturing, the absence of such regulations could certainly be deemed a subsidy. Relief would then take the form of an additional import duty after a finding of material injury. Alternatively, Congress could expressly grant Commerce the authority to impose an MES Duty.
The Trump Administration has made clear that improving the environment while bolstering economic opportunity is an important priority. An MES Duty achieves both outcomes by targeting the real drivers of global emissions and satisfying a trade priority of leveling the playing field for energy intensive products. It also provides a strong incentive to engage the U.S. on free trade agreements that could blunt the impact of MES Duty and promote the export of U.S. pollution control technology.
President Trump is right. With the right policies in place, the United States can once again be a manufacturing powerhouse. By adopting a MES Duty as the linchpin of “America First” environmentalism, Trump can advance his domestic policy goals while taking the moral high ground on climate change.
Surya Gunasekara is the author of Environmental Overreach: The EU’s Carbon Tax on International Aviation. He previously served as Chief of Staff and Tax Counsel to Rep. Jim Renacci, R-Ohio, and Tax and Trade Counsel at the American Petroleum Institute.
