US chemical imports face ‘green’ border tax

The US Congress is currently close to finalising a Bill that would aim to tackle climate change. This follows the EU model by establishing a carbon price via a cap-and-trade system, and is very welcome news.

However, there is a sting in the tail, as currently drafted. For it also calls for a border tax on carbon-intensive goods. Chemicals would inevitably be a prime target for such a tax, and ‘The Economist’ rightly devotes an editorial to attacking this concept.

Proponents of the border tax argue that it would encourage other countries to reduce their carbon footprint. It would also stop American producers being disadvantaged by the higher costs imposed by the new higher US standard. But its costs could be huge.

As ‘The Economist’ comments, not only would a ‘massive bureaucracy be needed to certify the carbon content of different goods imported from different factories in different countries.’ But the indirect cost could be even higher, as ‘such a tax would be a dangerous weapon in the hands of America’s growing gang of protectionists’.

‘The Economist’ is not prone to exaggeration. It says that if these measures are passed, America risks starting ‘a global trade war’. Chemical industry executives need urgently to get themselves up to speed on this issue. And the trade associations need to monitor developments very carefully.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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