Carbon Tax Could Boost U.S. Steel, Other Industries

May 26, 2021
By Dean Scott

A carbon tax could give U.S. steel makers and other industries a leg up on foreign imports—if combined with a border tariff on more carbon-intensive imports from China and other countries, the Climate Leadership Council said in a report today. U.S. steel and other heavy industries enjoy a “carbon efficiency advantage” over many competitors, including steel from China and Brazil, and applying a border carbon tariff on imports would boost demand for domestic production, according to the CLC study, Leveraging a Carbon Advantage: Impacts of a Border Carbon Adjustment and Carbon Fee on the US Steel Industry.

The CLC was launched in 2017 by Republicans including former Secretary of State James Baker, backing a carbon tax that would funnel all of the revenue to U.S. households. The plan is now backed by ExxonMobil and more two-dozen big U.S. companies and several environmental groups. CLC’s proposal would start with a $43 per metric ton carbon tax that would gradually rise 5% a year. U.S. exports of steel and other products would get a full rebate of the domestic carbon fee they pay. Imposing a border tariff would boost the U.S. steel sector because its products are between one-quarter and one-half the emissions intensity of imported steel from Mexico, Brazil, India, China, Japan, South Korea, and Taiwan.