Why are some Republicans pushing new taxes and higher prices?

Here’s a concoction whose toxicity conservatives instinctively recognize: new taxes, higher prices, punishing energy use, and giving foreign countries leverage over how the U.S. regulates. And yet a handful of Republicans are promoting a policy idea that will lead to those very outcomes.

A carbon tariff is a tax on imported goods. It would result in American businesses and consumers paying higher prices.

Sens. Bill Cassidy (R-La.), Lindsey Graham (R-S.C.), and Roger Wicker (R-Miss.) introduced legislation, the Foreign Pollution Fee Act (S. 3198), which would impose a carbon tariff. To his credit, Wicker quickly and wisely took his name off of the legislation. There’s also Senator Kevin Cramer’s (R-N.D.) PROVE IT Act (S. 1863), which would standardize greenhouse gas emission measurement for various products in the U.S. and foreign countries, setting the stage for a carbon tariff.

There are actually two taxes of concern with these bills: the tax on imports and a domestic carbon tax. Once an emissions measuring scheme for domestic and foreign products has been established to impose a carbon tariff, it will also put in place the structure necessary for domestic carbon tax advocates to impose this new tax on Americans. It would be naïve to think otherwise.

In fact, a domestic carbon tax would likely be required in order to impose a carbon tariff that complies with our international trade obligations.

Since more than 80 percent of the world’s energy comes from coal, natural gas, and oil, which produce carbon dioxide emissions, a carbon tariff is a tax on the energy that makes modern life possible and keeps billions of people alive every winter. Put more simply, it’s a tax on modern life. It would, among other things, make medical care, housing, communications, and transportation less affordable, especially for people who already struggle to pay their bills.

This push for a carbon tax also helps legitimize extreme climate policies that persecute ordinary activities resulting in greenhouse gas emissions, from efforts to ban natural gas appliances and gasoline-powered vehicles to limiting the consumption of meat.

Another problem is extraterritorial regulation — the kind of regulation that seeks to impose one state or nation’s moral preferences on activities occurring outside its borders. This is something American farmers know all too well.  For example, states like California prohibit agricultural products, such as eggs, from coming into the state unless farmers, including those outside the state, produce food consistent with California legislators' ethical beliefs. This has nothing to do with the quality or safety of the food; it’s simply a way for California to try and influence the agricultural practices of farmers in other states.

Through carbon tariffs, the U.S. would be doing the same thing that California is doing: using trade barriers to impose unilaterally its ideological preferences on the domestic policies of sovereign governments. And that's a two-way street. Just imagine foreign countries trying to impose their moral preferences on Americans by using tariffs as leverage over how the U.S. uses energy or how American farmers produce food. By imposing carbon tariffs, the U.S. will have helped to set the precedent for such an outcome. 

Some proponents of carbon tariffs, including Cassidy, argue that these tariffs are needed to go after China and its greenhouse gas emissions. The U.S. would be imposing massive taxes on Americans, increasing domestic prices, and letting foreign countries have leverage over our regulatory system just so we could try and get China to reduce its emissions.

But if Cassidy is really concerned with China’s emissions, he should develop legislation that is specifically targeted at China, which doesn’t simultaneously torpedo America’s well-being. In the unlikely event that China reduces emissions simply because of U.S. carbon tariffs, the associated benefits, if any, would pale in comparison to the massive costs imposed by the tariffs.

There is something far more direct that Cassidy could do to address China’s emissions: propose that China no longer be considered a developing country in environmental agreements. China's current designation as a developing country means that China doesn’t have the same emissions reduction obligations as the U.S.

Policymakers, regardless of party, should reject anything connected to carbon tariffs. After all, higher taxes and higher prices are terrible policy and will undermine the economic wellbeing of all Americans.

Daren Bakst is director of the Competitive Enterprise Institute’s Center for Energy and Environment and a Senior Fellow.