Are carbon tariffs climate policy? / Gregory Casey, Kyle C. Meng, Ivan Rudik.

Format:

Book

Author/Creator:

Casey, Gregory.

Contributor:

Meng, Kyle C.

Rudik, Ivan.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w35307.

NBER working paper series no. w35307

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2026.

Summary:

Carbon import tariffs, traditionally considered a complement to domestic climate policy, are increasingly proposed as standalone policies. We build a quantitative trade model to compare U.S. carbon tariffs with and without a domestic carbon tax, each applied to a set of carbon-intensive, trade-exposed sectors. We find three main results. First, a U.S. carbon tariff increases U.S. emissions, lowers foreign emissions, and on net achieves half the global emissions reductions of the combined policy, which lowers both U.S. and foreign emissions. Second, both approaches increase U.S. GDP and welfare, but the combined policy has a larger effect due to terms of trade improvements. Third, global emissions reductions from multilateral tariff-only agreements are modest and do not increase monotonically with greater membership, whereas under combined policies they scale considerably with membership.

Notes:

June 2026.

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