White House withholds support for Democrat carbon border tax

The White House is withholding support for a Democratic proposal to impose a carbon tax on imports from China and other countries. The proposed tax aimed to level the playing field between US companies, which face environmental regulations at home, and foreign competitors with less rigorous standards.

It had been included in the US$3.5trn reconciliation package. President Joe Biden and members of his top administration team have publicly expressed support for a carbon border tax as a tool to advance climate goals. However, the White House is concerned the proposed tax would raise a broad range of prices of consumer goods which would conflict with Biden’s pledge not to tax any American earning less than US$400k per year. The White House is also reportedly concerned that the tax could lead to potential allegations by Republicans that the administration’s policies were driving inflation. This comes amid tax policy coordination with the EU which recently announced its own carbon border tax.

Adapted from an article in Reuters