U.S. tariffs would chill climate pact and trade

By Timothy Gardner

WASHINGTON (Reuters) - Any threat by the United States to slap fees on imports from countries it perceives as weak on cutting carbon emissions could hamper trade relations and delay international efforts to combat global warming.

Lawmakers in states that produce cement, chemicals, steel and other energy-intensive products have called for such tariffs in climate legislation. They fear those industries looking to cut regulation costs could pull up stakes and move to countries that don't have strong climate plans.

But experts say the tariffs may do more harm than good.

"One of the big problems is retaliation," said Jeffrey Frankel, professor of capital formation at Harvard University's Kennedy School of Government. "Other countries will say 'If the U.S. is doing it, we'll put up our own trade barriers.'"

The manufacturers and labor unions are urging the U.S. Congress to include carbon tariffs, also known as border adjustments, in the long-delayed climate bill.

Under the version of the bill passed narrowly by the House of Representatives in June, fees would be levied on such goods from countries that do not adopt plans to curb emissions by 2018. Leaders in the Senate also see the tariffs as important if the bill is to win the required 60 votes.

Kenneth Green, a scholar at the American Enterprise Institute, said trade spats could put U.S. agricultural and high-tech exports at risk.

At issue is the chance that climate could add yet another layer of contention into already complicated U.S. trade relations with China and other developing countries. China and the United States are already at odds on trade over Chinese tires and U.S. exports of poultry and auto products.