A broad view showcases shipping containers at Hong Kong’s Port on April 9. President Trump dealt a severe blow to the post-war trade system last week by imposing aggressive tariffs on various countries. Even with some retractions, it is evident that the era of freely flowing goods across borders that has characterized global economics is unlikely to return soon. The tensions in international relations are poised to disrupt supply chains for clean energy in the near term, particularly as many clean energy technologies are predominantly manufactured in China. Looking ahead, the aftermath of recent events prompts the question of what kind of global trade framework will emerge in the coming years.
The relationship between climate efforts and trade has long been a topic of discussion. The possibility of climate considerations becoming a central focus in trade talks is not far-fetched, especially given the current geopolitical climate. Trade restrictions have been proposed as a means to address the issue of countries not adequately addressing climate change. Despite fears of causing geopolitical rifts, recent developments, particularly during the Trump administration, have shown that climate-linked trade barriers could be a viable option.
Trump’s actions have once again disrupted trade norms, paving the way for a reevaluation of the relationship between climate and trade. In the U.S., discussions are underway about the potential implementation of a carbon fee at the border as a way to hold countries like China accountable for their emissions-intensive practices. The proposal, introduced by Republican Senators Graham and Cassidy, has garnered support from various groups, including those traditionally focused on climate advocacy. The rationale behind the fee is not only environmental but also economic, with the aim of balancing competitiveness while addressing emissions concerns.
This week in legislation, Cassidy proposed that the U.S. could collaborate with the E.U. and other allies to align their border standards, although it remains uncertain how this aligns with Trump’s confrontational approach towards traditional U.S. allies. Meanwhile, a different dialogue is unfolding regarding the intersection of climate and trade in various regions of the world, emphasizing solidarity and reciprocity over competition.
Countries like India and Brazil are expressing frustration as they evaluate the competitive landscape and the possibility of their products facing emissions taxes. They argue that these policies are unjust considering the historical emissions from wealthier nations. They believe that imposing a carbon fee negatively impacts local businesses, hindering investments in decarbonization. Instead, they advocate for countries like the U.S. to implement stricter emission policies and provide financial support to encourage decarbonization efforts in developing nations.
This issue was a significant point of contention leading up to last year’s United Nations climate conference in Azerbaijan and is expected to resurface at this year’s conference in Brazil. When questioned about this matter, Brazilian diplomat Andre Correa De Lago, tasked with overseeing this year’s U.N. talks, expressed optimism that multilateral cooperation could lead to a breakthrough. He stressed that solving crucial issues necessitates collaboration.
However, the U.S. is unlikely to play a significant role in the November talks, as Trump’s administration is nearing completion of the country’s withdrawal from the Paris Agreement. The increasingly fractured global landscape under Trump’s leadership could potentially fragment climate standards and disrupt clean technology supply chains. Companies seeking to operate in diverse markets will have to adapt by investing in low-carbon technologies tailored to meet evolving border requirements.
The future remains uncertain, but it is evident that a new trade agenda is emerging, with climate considerations playing a pivotal role. For more updates like this, subscribe to the TIME CO2 Leadership Report newsletter. Contact Justin Worland at justin.worland@time.com for further inquiries.
