So what does all this have to do with carbon tariffs? This is obviously true if a nation imposes a carbon tax, or a cap-and-trade system, in which businesses must purchase licenses to pollute. What might make carbon tariffs slightly trickier than VAT border adjustments is the likelihood that an important part of climate policy will involve regulations rather than a straight carbon tax. Carbon border adjustments are clearly the right thing to do, and better to do them imperfectly than not at all. So two cheers for carbon tariffs.

Source: International New York Times July 16, 2021 16:07 UTC