Carbon tariffs are a nice gesture

Matt Yglesias has a good post about the negligible effect of a carbon tariff.  The idea is that American manufacturers would face a cost disadvantage because competitors in countries without similar regulations (mainly in the developing world) would not have the same additional cost.

It’s a legitimate concern save two reasons.  First, as Matt points out, most of our trading occurs with developed countries (and our largest trading partner is Canada).  These countries have signed the Kyoto Protocol, so their companies already have strict(er) emissions requirements than we do.  That means they wouldn’t be hit with a proposed carbon tariff.

Second, it’s fair to assume that a carbon tariff is designed a China tariff.  The problem is that China has already promised to reduce its per capita emissions.  Granted, they have not signed the Kyoto Protocol and Hu Jintao’s promises aren’t backed up by laws.  On the other hand, the government of China has shown that it commits with intensity to an objective once a target has been set.  In other words, there’s ample reason to believe that China is more serious about fighting emissions than we are.

So the carbon tariff would probably be a negligible measure, but that’s not a reason to be against it.  In fact, it’s a really good bargaining chip for people who want passage of a climate change bill. The effect of a tariff, as Matt shows, would be marginal on developing nations, but it gives cover so Congresspeople can say that they are protecting American jobs and industry.  If that has to be inserted to get serious cap and trade, then so be it.  If every nation passes similar legislation – and some EU countries are discussing it – then the legislation will be moot since every country will have emissions controls.