Europe Could Place Carbon Tax On American Goods Made Under Trump

The world is plotting how to push back against the climate change-denying future Trump administration. Apart from continuing on with the Paris agreement, which is now legally active, Nicolas Sarkozy – the former French president – has touted a rather interesting idea.

As reported by Grist, Sarkozy told French television channel TF1 that, should he be reelected, he would demand that the entirety of Europe place a carbon tax “of 1 to 3 percent for all products coming from the United States, if the United States doesn’t apply environmental rules that we are imposing on our companies.”

If this was enforced, it would hit Trump in a place that would genuinely hurt – his wallet.

Carbon taxes have been touted by governments all across the world. Canada’s PM Justin Trudeau, for one, recently announced that a nationwide carbon tax would come into force by 2018.

Generally speaking, they are set up in order to tax companies or industries that emit particularly voluminous amounts of carbon dioxide. The more that’s produced, the more costly it will be – and thus, they are given an economic impediment if they refuse to shrink their carbon footprint.

Some carbon taxes have a cap-and-trade system. This would allow companies that can cut emissions easily to sell their “extra allowances” to others that are finding the process more difficult. Far from just a tax, this system creates an economic incentive for companies to work towards a low-carbon future.

In any case, carbon taxes tend to only be applied internally, within a nation’s boundaries. What Sarkozy is proposing – a carbon tax that’s placed on a country that looks set to be a rogue state when it comes to climate change mitigation – is far rarer.

France, too, is an important trading partner with the US, and not because it’s a wealthy, modern, populous nation. It also happens to be part of the European Union, one of the largest trading blocks in the world. The US enjoys a profitable, low-tariff exchange of goods with the continent, and with Brexit due to take place over the next few years, France’s importance to the US has increased.

If Sarkozy was to take power again, there’s a good chance that he may keep his pledge to get Europe to slap his proposed carbon tax on the US. There would have to be widespread support for the idea, and he would certainly need Germany’s backing. It’s ambitious, but not impossible.

Carbon taxes have only had a lukewarm reception with regards to the Paris agreement, but with the annual UN climate change summit underway in Morocco – one that hopes to come up with a low-carbon “rulebook” for the pact’s signatories – this could change. Watch this space.