The United States is the world’s second-largest emitter of carbon dioxide. Its trade partners could argue they are at a disadvantage if the United States frees its companies from the burden of climate regulations, analysts said.
Many of the biggest U.S. trade partners, including the European Union, Canada, Mexico and China already have or will soon implement carbon trading systems to cap the amount of CO2 companies are allowed to emit.
Dirk Forrister, president and CEO of the nonprofit International Emissions Trading Organization, noted that some foreign officials have raised the prospect of imposing a “carbon tariff” on U.S. products, but said that is uncharted territory and would have serious consequences.
“The notion of a trade battle over climate change is something everyone’s tried to avoid for two or three decades. That’s why we have an international agreement to put everyone in the same frame,” he said.
Rebecca Keller, senior science and technology analyst at risk consultancy Stratfor, said it would be difficult for a big bloc like the EU to reach consensus on such a drastic measure. Instead, she thinks more targeted tariffs on parts of the U.S. economy could gain momentum.
But Elkind, the former Obama official, suggested some nations may have little patience for the United States, given that the Paris Agreement gives signatories significant flexibility to set climate policies based on their individual circumstances.
“If one of the biggest emitters doesn’t wish to take advantage of that flexibility and stay part of the solution, I bet it will only embolden those who want to reach for more punitive approaches,” he said.
Watch: Will Musk dump Trump over Paris climate deal