Tag Archives: tariffs

Ahead of the tariff, U.S. imported 3 years worth of solar panels from China

1024x1024Panel imports were up 1,200 percent in fourth quarter 2017. That implies that installers were banking supplies to ride out the import tariff imposed by the Trump Administration. Unfortunately, it also means that the rapid technical and cost progress for panels may stall for that three year period.

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Could Trumps win lead to global carbon tariffs?

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Former French President Sarkozy suggested that if the U.S. pulled out of the Paris Climate Accord, that the EU impose carbon tariffs on U.S. goods. Many economists have suggested that this may be the best solution to gaining collected global action. So perhaps Trump’s win will actually further action on climate change rather than delay it.

Ideas on adopting world carbon prices

Two news items showed up today on the idea of adopting a worldwide carbon price to reduce GHG emissions. The general idea is to use one of three approaches: 1) world cap & trade allocations (which has been the underlying notion in negotiations so far); 2) setting a specific carbon price or tax through treaty; or 3) using trade tariffs by a coalition of participating nations to incent non-participating ones to control their emissions. There is evidence that pricing carbon is effective in reducing emissions.

The U.S. Secretary of Energy called for a world carbon price implemented through one of the first two methods listed here.

The new American Economics Review has an article that shows that a trade tariff regime imposed by a coalition can induce other nations to control their emissions.

The Strategic Value of Carbon Tariffs
Christoph Böhringer, Jared C. Carbone and Thomas F. Rutherford
We ask whether the threat of carbon tariffs might lower the cost of reductions in world carbon emissions by inducing unregulated regions to adopt emission controls. We use a numerical model to generate payoffs of a game in which a coalition regulates emissions and chooses whether to employ carbon tariffs against unregulated regions. Unregulated regions respond by abating, retaliating, or ignoring the tariffs. In the Nash equilibrium, the use of tariffs is a credible and effective threat. It induces cooperation from noncoalition regions that lowers the cost of global abatement substantially relative to the case where the coalition acts alone. (JEL D58, F13, F18, H23, Q54, Q58)
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