Congress weighs fees on imports from high-emitting countries By EPN Staff Two Republican senators are working to build support for a proposal that would boost reshoring U.S. manufacturing by imposing additional fees on imports from nations with higher carbon emissions. The Foreign Pollution Fee Act mirrors the EU’s Carbon Border Adjustment Mechanism (CBAM), aiming to shield American manufacturers from being undercut by goods made under looser environmental and climate rules in foreign countries. Why it matters This proposal ties climate policy to trade strategy. By increasing costs on carbon-intensive imports, proponents argue it will incentivize cleaner manufacturing abroad while protecting U.S.-based companies. Supporters also claim its revenue could bolster U.S. industries and fund environmental initiatives. The bill notes: The U.S. economy is 55 percent more carbon-efficient than the global average The U.S. has led the world in carbon emissions reductions over the past 15 years Federal environmental regulations impose an estimated $400 billion in annual costs borne by U.S. businesses and workers. Foreign businesses located in countries – such as China – that have weak, underenforced or nonexistent environmental standards have leveraged this competitive advantage to gain market share at the expense of the U.S. The bigger picture Introduced in April 2025, by senators Bill Cassidy (R-Louisiana) and Lindsey Graham (R-South Carolina), the proposal would apply fees across multiple sectors – including steel, aluminum, cement, glass, fertilizer, solar components and battery inputs – based on their carbon intensity relative to U.S. benchmarks. Modeling from Resources for the Future suggests the policy would shift U.S. imports toward cleaner-producing countries and help revive some domestic manufacturing. The proposal fits into a broader debate on deploying targeted financial incentives at the border as an environmental and economic tool. Critics argue the U.S. bill may be seen as protectionist if domestic producers aren’t similarly taxed, and that it could be viewed as discriminatory by the World Trade Organization (WTO) and ultimately raise U.S. consumer prices for imported goods. Additional context The EU’s CBAM, passed in 2023, starts reporting emissions in 2023-2025 and enforces full implementation in 2026. It targets sectors like steel, cement, fertilizer, aluminum and electricity and is part of the EU’s Green Deal. While supportive of global climate efforts, the EU’s CBAM has sparked resistance from trade partners concerned about costs and compliance and raised concerns about provoking potentially adverse economic impacts on manufacturers exporting from the EU. China, which is responsible for 30 percent of global carbon emissions, has benefitted from policies giving irresponsible manufacturers in high-emitting countries a competitive advantage. The Foreign Pollution Fee Act represents a new effort to use trade levers to address this issue and achieve U.S. economic and environmental goals.
