This is from the NY Times:
Diplomats from around the world converged here this week with the plan to put details on last year’s Paris climate accord and move the globe closer to controlling the industrial emissions that are heating the planet.
Instead, with the election of Donald J. Trump — and his threat to withdraw the United States from the accord — shellshocked negotiators confronted potentially deep fissures developing in the international consensus on climate change. On the sidelines of the negotiations, some diplomats turned from talking of rising seas and climbing temperatures toward how to punish the United States if Mr. Trump follows through, possibly with a carbon-pollution tax on imports of American-made goods.
“A carbon tariff against the United States is an option for us,” Rodolfo Lacy Tamayo, Mexico’s under secretary for environmental policy and planning, said in an interview here. He added, “We will apply any kind of policy necessary to defend the quality of life for our people, to protect our environment and to protect our industries.”
Forcing United States industries to turn to cleaner energy sources with the hammer of an import tariff is not far-fetched. Countries imposing costs on their own industries to control carbon emissions could tell the World Trade Organization that United States industries are operating under an unfair trade advantage by avoiding any cost for their pollution.
The tax would be calculated based on the amount of carbon pollution associated with the manufacturing of each product. That would impose a painful cost on the heaviest industrial polluters, particularly on exporters of products containing steel and cement.
“The Paris Agreement is meant to get everyone on board in one structure where you can address climate change together,” said Dirk Forrister, the president and chief executive of the International Emissions Trading Organization, a nonprofit organization that consults with governments and companies. “But if one big country backs out it could trigger a whole wave of trade responses.”
He added: “There is no need to start a trade war over climate change. But it might happen.”
...
... diplomats are quietly going off their agendas to begin planning how to react if Mr. Trump chooses to reject the Paris Agreement. The pact, as it stands, contains no enforcement measures, such as economic sanctions, for countries that do not comply. But individual governments could put trade sanctions in place on their own or in concert.
In Mexico, which is already preparing for a newly adversarial relationship with an American president who has threatened to build a wall along the border, government officials said they have begun considering the idea of a carbon tariff.
Canada, the United States’ largest trading partner, is also discussing a tariff. Some Canadian provinces, including Ontario and Quebec, already have carbon tax policies that include fees imposed on fossil-fueled energy generated across provincial borders.
“I see that extending across the Canadian border if the U.S. pulls out of Paris,” said Lisa DeMarco, a senior partner with DeMarco, Allan, a Toronto-based climate law firm that advises Canadian provinces and international businesses.
“If you want to sell your goods in Canada, you’d have to meet the same emissions standards,” she said.
I've always thought that it is possible to impose a carbon tax on domestic and imported goods in a way that is consistent with WTO obligations. At the same time, though, actual attempts to construct such a tax in the real world of legislation and regulation are likely to end up with one or more aspects that violate these obligations.
And while the discussion in the NY Times article is preliminary and cursory, so we don't know what precise measures might be used, I have doubts that a carbon tariff imposed in response to Trump pulling the U.S. out of the Paris Agreement would be consistent with WTO obligations. Here's one reason why: Taking action against only the U.S., and not all the other countries whose carbon emissions regulation fails to meet someone's standard, would be a problem under various GATT/WTO provisions.
Of course, that's just the legal aspect. There's also the political dynamic here. I suspect that if the Trump administration were faced with such tariffs, it would not wait for a WTO ruling, but would press ahead with retaliation right away. So any government considering this has to be ready for a trade war. Note that the people quoted above suggesting carbon tariffs are from the environmental field. The trade diplomats and lawyers may have a different view.
