U.S. officials are proposing to charge tariffs on steel and aluminum based on how much carbon is emitted by the producing country's industry in a bid to combat climate change and "dirty" metals made in China and elsewhere, two people familiar with plan.
The US Trade Representative's proposal to negotiate with the European Union would create a "club" of countries seeking to cut carbon emissions. The plan will set pollution standards for steel and aluminum production.
Countries with emissions above the standards will pay higher tariffs when exporting metals to countries with lower emissions, sources briefed on the plans said. Countries with emissions from steel and aluminum plants at or below standards will pay lower tariffs, the sources said.
The proposal, now being passed to industry and the EU, grew out of discussions between the US and the EU on green steel production over the past year after Washington agreed to eliminate tariffs on EU-made steel and aluminum in exchange for a quota. system.
US steelmakers claim they have the world's lowest levels of carbon emissions, in part because 70% of US steel is made from scrap iron in electric arc furnaces rather than coal-fired blast furnaces. Steelmakers elsewhere, including Europe, are relying more on coal, and the plan would benefit US producers.
The US and EU low-carbon steel talks have largely targeted China, which relies on coal for most of its steel, as well as low-quality iron ore, which contributes to high carbon emissions.
If implemented, the plan will provide new grounds for pushing Chinese steel out of Western markets. Most US tariffs are currently based on anti-dumping laws to combat below-cost pricing, laws to combat unfair government subsidies, or laws to protect strategic industries.
“Being a club member would be an advantage as it would provide lower carbon tariffs while countries outside the club would pay higher tariffs,” one of the sources said, adding that the proposal is aimed at stimulating investment to reduce emissions.
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