A proposed carbon border adjustment tax would probably do little to combat global climate change, but it would absolutely intensify already record-setting levels of U.S. inflation. It’s hard to understand how any Republican lawmaker who truly embraces the GOP’s longstanding commitment to sound economic policies that benefit consumers and employers could support this plan.
A carbon border adjustment tax, or “BAT,” has been proposed before. In the past the goal was to promote U.S.-made products by making foreign imports more expensive. This time it is climate-driven, based on targeting imports from countries that have less stringent environmental regulations than we do, such as China and India.
The problem is that however good the intentions are behind a carbon border tax, the consequences would be horrific, especially right now. What is certain is that this plan, another form of a carbon tax and similar in effect to a tariff, would increase prices for American consumers. It would not only make imported goods more expensive but also add to the cost of producing U.S.-made goods. As always, manufacturers, farmers, ranchers and sellers will have no choice but to pass those added costs on to their customers and inflation will continue to grow.
Agricultural producers would definitely feel the pain. The BAT would directly increase the cost of producing nitrogen fertilizers that depend on natural gas. The cost of nitrogen applications essentially tripled from 2020 to 2021. Farmers cannot continue to provide an increasingly food-insecure world population with the nutrition they need if they can’t afford to fertilize their crops.
Middle-class consumers are struggling to make ends meet and lower-income families are already faced with tough choices between fuel, rent and food on the dinner table. Driving further cost increases in food and other products families need with a BAT could not come at a worse time.
Furthermore, a border adjustment tax would be impossible to fairly enforce in a world economy where goods and piece parts flow back and forth from country to country, and the end impact on carbon emissions would be difficult to determine and almost certainly fall far below levels necessary to produce a meaningful reduction in global temperatures.
Alaska Sen. Lisa Murkowski has been named as one of a handful of Republicans who have shown interest in climate change discussions led by Democratic Sen. Joe Manchin of West Virginia that include the possibility of a BAT. The Alaska Farm Bureau is committed to improving economic wellbeing and expanding agriculture in our state. A BAT will not further those efforts. We hope Sen. Lisa Murkowski will lead her fellow senators in search of better solutions that won’t saddle her constituents with the economic hardships a BAT would produce.
Amy Seitz is executive director of the Alaska Farm Bureau. The Alaska Farm Bureau is a member of the America Farm Bureau Federation, an independent, non-governmental, voluntary organization governed by and representing farm and ranch families united for analyzing their problems and formulating action to achieve educational improvement, economic opportunity and social advancement and, thereby, to promote the national well-being.
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