By Shae Reinberg, 2025 Jan Schori Summer Fellow, BCSE
As trade takes center stage under President Trump’s second term, pollution import fees are gaining traction across the political spectrum as a strategy to align pollution-reduction goals with economic competitiveness and national security. Today, this policy framework is seeing real world applications by the European Union (EU) and more.
As other countries are moving forward with this policy, adopting a pollution import fee of its own would give U.S. industry a greater competitive edge. Pollution import fees offer a bipartisan opportunity to align climate and trade policy while reinforcing U.S. leadership. Through stakeholder engagement, global cooperation, and data transparency, this policy encourages cooperation and innovation between U.S. industries and trade partners to reduce emissions. This blog will break down the role of pollution import fees in reducing emissions and improving competitiveness for the U.S. and countries around the world.
How Pollution Import Fees Use Trade to Reduce Emissions
Pollution import fees utilize trade as a mechanism through which countries can hold foreign polluters accountable. They address bipartisan concerns about variations in pollution-reduction policies in the global market, preventing emissions leakage that occurs when industries shift their production to other countries with weaker environmental standards.
By placing a fee on the emissions intensity of foreign products compared to domestic products, pollution import fees level the playing field for emissions-intensive products such as steel, aluminum, cement, and, increasingly, components used in clean energy manufacturing. In this way, they protect domestic manufacturers’ competitiveness in the global market.
Rewarding efficient and clean industries, pollution import fees encourage companies to reduce their emissions and motivate other countries to decarbonize their economies.
Global Momentum for Pollution Import Fees Creates a Prime Opportunity for U.S. Leadership
Pollution import fees are gaining momentum globally. The European Union’s carbon border adjustment mechanism (CBAM) is currently the only operational system, applying fees on both imports and domestic products based on their pollution. The United Kingdom, Taiwan, and Norway are in the process of implementing their own pollution import fees, while Australia, Canada, India, South Korea, and Japan are considering proposals. In the United States, Washington State is weighing a fee to be added onto the pollution of imported products to complement its existing carbon pricing system.
Other countries hope to align their policies on pollution fees, with Brazil’s Minister of Finance leading efforts to form a climate coalition ahead of COP 30. This coalition would unite countries in placing pollution fees on both domestic and foreign products while encouraging broader participation and policy alignment to reduce emissions. Brazil’s support is rooted in the potential for such a coalition to channel more funding to developing countries for technologies and financial tools that can cut emissions.
As pollution import fee proposals gain traction worldwide, the United States can lead through its own potential measures and collect data on its domestic industries’ emissions.
Supporting Emerging Economies Through Policy Design
Emerging and developing economies have raised concerns that pollution import fees could disproportionately impact their exports, urging inclusion in policy design discussions. The EU’s CBAM offers exemptions for countries with comparable carbon pricing systems and directs some revenue to support decarbonization and green technologies in partner nations.
As the United States and other countries consider their own approaches, open negotiations with trade partners will be key to avoiding disruption and maximizing decarbonization incentives. A U.S. proposal could provide targeted exemptions, financial assistance, and technology support to help emerging economies transition while promoting long-term development.
Aligning Trade, Climate, and Economic Growth Through Smart Policy Design
Balancing trade objectives with emissions-reduction goals remains a major challenge, but pollution import fees present opportunities to achieve both, strengthening international partnerships and advancing U.S. leadership. As Senator Bill Cassidy (R-LA)’s Foreign Pollution Fee Act of 2025 advances and new proposals emerge, it is essential that policymakers and stakeholders shape designs that align economic resilience with pollution reduction goals.
Investment in emissions data infrastructure, such as through the PROVE IT Act, can ensure fees support both domestic interests and global climate goals. Successfully navigating the complexities of policy design requires continued collaboration with stakeholders and transparency in emissions data.
About the author: Shae Reinberg served as BCSE’s 2025 Jan Schori Summer Fellow. She is a recent graduate of Washington and Lee University with a degree in environmental studies and global politics.