Senators Revise Plan to Tie Duties to Carbon Emissions

Mar. 5, 2025
By: Ashley J. Bodden

The idea that environmental regulations and their costs impact international trade is not a new one. It’s been discussed before. Now two members of the Senate Finance Committee are developing a(nother) proposal for a fee on emission-intensive imports. Senators Bill Cassidy (R-LA) and Sheldon Whitehouse (D-RI), with the help of think tank Silverado Policy Accelerator, are looking to bring forth a bill that would require a fee on certain emissions-intensive imports.

This proposal isn’t a new topic for Senator Cassidy to get behind. In 2023, Cassidy put forth the draft bill “Foreign Pollution Fee Act” with Senator Lindsey Graham and later revised it in December 2024. That bill proposed a set a tariff on imports that have higher carbon emissions than goods made within the United States.

In this proposed measure, Cassidy contends that it would help grow the domestic manufacturing industry while incentivizing other countries to reduce their emissions by replacing coal with liquified natural gas exports from the United States. Although Cassidy’s proposal does not include a domestic fee, Senator Whitehouse has floated the idea of pairing the measure with a domestic carbon tax on certain emission-heavy goods.

United States Trade Representative Jamieson Greer stated in his confirmation hearing that he wanted to work with lawmakers to explore the idea of competitive fairness, including equalizing costs for manufacturers from countries with lax environmental standards. Former Trade Representative Robert Lighthizer, during the first Trump administration, supported the idea of carbon tariffs and viewed uneven environmental regulations as a trade issue.

The latest iteration of the carbon duty idea is still in the early stages. One serious challenge may be implementing a carbon duty while there is tremendous uncertainty in United States trade policy. While tariffs are being used as leverage with respect to foreign economic policy, border security, and fentanyl imports and duties or investigations are being carried out related to imports of steel, aluminum, cooper and various wood products, it may simply be too difficult to also implement a complex system of carbon use tariffs.

Should you have questions regarding trade emissions or any other trade-related questions, do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP.