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Paris after Trump: An inconvenient insight

Author

Listed:
  • Christoph Boehringer

    (University of Oldenburg, Department of Economics)

  • Thomas Fox Rutherford

    (University of Wisconsin, Madison, WI 53706, USA)

Abstract

With his announcement to pull the US out of the Paris Agreement US President Donald Trump has snubbed the international climate policy community. Key remaining parties to the Agreement such as Europe and China might call for carbon tariffs on US imports as sanctioning instrument to coerce US compliance. Our analysis, however, reveals an inconvenient insight for advocates of carbon tariffs: Given the possibility of retaliatory tariffs across all imported goods, carbon tariffs do not constitute a credible threat for the US. A tariff war with its main trading partners China and Europe might make the US worse off than compliance to the Paris Agreement but China, in particular, should prefer US defection to a tariff war.

Suggested Citation

  • Christoph Boehringer & Thomas Fox Rutherford, 2017. "Paris after Trump: An inconvenient insight," Working Papers V-400-17, University of Oldenburg, Department of Economics, revised Jun 2017.
    • Handle: RePEc:old:dpaper:400
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    4. Terrence Iverson, 2022. "Advancing Global Carbon Abatement with a Two-Tier Climate Club," CESifo Working Paper Series 9831, CESifo.
    5. Larch, Mario & Wanner, Joschka, 2024. "The consequences of non-participation in the Paris Agreement," European Economic Review, Elsevier, vol. 163(C).
    6. Achim Hagen & Jan Schneider, 2017. "Boon or Bane? Trade Sanctions and the Stability of International Environmental Agreements," Working Papers V-403-17, University of Oldenburg, Department of Economics, revised Sep 2017.
    7. Niven Winchester, 2018. "Can tariffs be used to enforce Paris climate commitments?," The World Economy, Wiley Blackwell, vol. 41(10), pages 2650-2668, October.
    8. Mario Larch & Joschka Wanner, 2019. "The Consequences of Unilateral Withdrawals from the Paris Agreement," CESifo Working Paper Series 7804, CESifo.
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    More about this item

    Keywords

    Paris Agreement; US withdrawal; carbon tariffs; optimal tariffs; tariff war; computable general equilibrium;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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