Washington’s withdrawal from a global pact on climate change might give U.S exports a competitive advantage but supporters of the deal will struggle to respond with any carbon tariffs due to the complexity of keeping them within international trade rules.
President Donald Trump said on Thursday the United States would quit the Paris Agreement because it hurt the U.S. economy, although U.N. regulations mean any withdrawal would take four years.
Leaving might give U.S. exporters an edge over rivals in nations where industry has to pay to emit carbon dioxide through a carbon tax or emissions trading scheme, economists say.
But the Paris deal sets no penalties for withdrawal and says efforts to ensure compliance should be “non-adversarial and non-punitive,” leaving it up to governments or trade blocs to ensure any retaliation meets World Trade Organization (WTO) codes.
Some manufacturers are already fretting about the U.S. competitive edge. But European and