Connect with us

Business

Carbon tariff proposal carries risks and consequences for Canada

Published

8 minute read

A carbon tariff—a policy that would impose fees on imported goods based on their carbon emissions—is built on the idea that Canada should penalize foreign producers for not adhering to stringent climate policies. While this may sound like a strong stance on climate action, the reality is that such a policy carries major risks for Canada’s economy. As a resource-rich nation that exports carbon-intensive products like oil, natural gas, and minerals, Canada stands to lose more than it gains from this approach.

Mark Carney, who is competing for the federal Liberal leadership, has made the introduction of a carbon tariff the number two promise in his 16-point industrial competitiveness strategy.

Key problems with a carbon tariff in Canada

1. Retaliation from other countries

A carbon tariff (also known as a Carbon Border Adjustment Mechanism, or CBAM) would not go unchallenged by Canada’s trading partners. Major exporters to Canada, such as the United States and China, are unlikely to accept this policy without a response. They could retaliate by imposing tariffs on Canadian goods, making it significantly harder for Canadian businesses to compete in international markets. This could be particularly damaging for key industries like oil and gas, mining, and manufacturing, which rely heavily on exports. A trade war over carbon tariffs could weaken the Canadian economy and lead to job losses across multiple sectors.

2. Canada is an exporting nation

Canada exports far more carbon-intensive goods than it imports. By introducing a carbon tariff on foreign products, Canada is effectively inviting other countries to do the same, targeting Canadian exports with similar carbon-based tariffs. This would make Canadian goods more expensive on the global market, reducing demand for them and harming the very industries that drive Canada’s economy. The result? A weaker economy, job losses, and higher costs for businesses that depend on trade.

3. Big business paying for consumers’ emissions

The Carney plan also proposes to make large businesses bear the cost of helping individual households lower their carbon emissions. While this may sound like a fair approach, in practice, these costs will be passed down to consumers. Businesses will need to offset these additional expenses, leading to higher prices on everyday goods and services. In the end, it is Canadian families who will bear the financial burden, facing increased living costs, higher taxes, and fewer job opportunities as businesses struggle to absorb the additional costs.

CBAM in context: implications for Canada

Has this been tried elsewhere?

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is currently in effect. It entered its transitional phase on October 1, 2023, during which importers of certain carbon-intensive goods are required to report the embedded emissions of their imports without incurring financial liabilities. This phase is set to last until the end of 2025. The definitive regime, where importers will need to purchase CBAM certificates corresponding to the carbon emissions of their imported goods, is scheduled to begin in 2026.

However, Europe is not Canada’s largest trading partner—that is the United States. With Donald Trump back in the presidency, there is no chance that the U.S. will implement a CBAM of its own. If Canada were to move forward with a unilateral carbon tariff, if anyone prepared to argue that it would not face significant economic punishment from the Trump White House?

Moreover, with 91 percent of the world having no carbon tariff, other countries would impose countermeasures, leaving Canadian businesses struggling to remain competitive.

This raises the question: is the push for a carbon tariff in Canada more about political positioning than economic pragmatism? Given the unlikelihood of U.S. participation, a Canadian CBAM would amount to a unilateral economic sacrifice. While this may appeal to certain voter bases, the reality is that such a policy would carry immense risks without global coordination. Policymakers should carefully consider whether pursuing this path makes sense in a world where Canada’s largest trading partner is unlikely to follow suit.

Where do others stand?

Chrystia Freeland, the former finance minister and current Liberal leadership candidate, has not explicitly detailed her stance on carbon tariffs. However, she has emphasized the importance of defending Canadian interests against U.S. economic nationalism, particularly in response to potential tariffs from the U.S.

Conservative leader Pierre Poilievre is a vocal critic of carbon pricing mechanisms, including carbon taxes, and has pledged to repeal such measures if elected.

Elizabeth May, leader of the Green Party, has consistently advocated for strong environmental policies, including carbon pricing, but has not specifically addressed carbon tariffs in recent statements.

What it means to consumers

Here are some relatable examples of carbon-intensive exports and imports for the average Canadian:

Carbon-Intensive Exports from Canada

Oil & Gas – Canada is a major exporter of crude oil, natural gas, and refined petroleum products, particularly to the U.S. If a carbon tariff were applied to these products, it could make them more expensive and less competitive in global markets, affecting jobs in Alberta, Saskatchewan, and Newfoundland.

Lumber & Pulp – Canada is a leading exporter of forestry products, including lumber, paper, and pulp, which require significant energy and emissions to produce. If tariffs are imposed on Canadian wood products, the forestry sector could suffer.

Agricultural Products – Fertilizers, beef, and grain production all have significant carbon footprints. If trading partners retaliate with tariffs, Canadian farmers may struggle to compete in global markets.

Carbon-Intensive Imports into Canada

Steel & Aluminum – Canada imports a large amount of steel, primarily from China and the U.S., which is essential for industries like construction, manufacturing, and automotive production. A carbon tariff would drive up costs for these industries.

Consumer Goods from China – Many everyday products (electronics, clothing, appliances) are imported from countries with high-carbon electricity grids. A carbon tariff could increase the price of these goods for Canadian consumers.

Food Products – Imported produce, meats, and packaged foods from countries like the U.S. and Mexico often have high transportation-related emissions. A carbon tariff could increase grocery bills.

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Business

Biden-era tax on natural gas repealed, a boon for energy industry

Published on

Fr0m The Center Square

By Thérèse Boudreaux

America’s natural gas industry celebrated Monday after President Donald Trump signed into law a resolution repealing Biden-era fees on methane emissions.

The Waste Emissions Charge, which Republicans say is the equivalent of a natural gas tax, was authorized by the 2022 Inflation Reduction Act and implemented by the Environmental Protection Agency in November 2024.

The resolution rescinds that regulation under the Congressional Review Act. The CRA legislation gives Congress the authority to repeal regulations issued during the final months of a previous administration.

House Committee on Energy and Commerce Chairman Brett Guthrie, R-Ky., called the repeal “a victory for the American businesses and families who would have been forced to bear the cost of the Biden-Harris Administration’s natural gas tax.”

“It’s time to restore American energy dominance by harnessing innovation and producing the natural gas needed to support our electric grid,” Guthrie added.

Energy experts who testified before Congress in February said the high energy prices during Joe Biden’s presidency directly resulted from increased environmental regulations on energy production. The regulations slowed down domestic energy production and consequently led to increased costs, they said.

The American Exploration and Production Council (AXPC) shares the same view, praising Republicans in Congress and Trump for repealing the Waste Emissions Charge.

“AXPC thanks President Trump for signing the Congressional Review Act legislation – to undo EPA’s flawed rule to implement the natural gas tax,” AXPC CEO Anne Bradbury stated. “While American energy producers remain laser focused on reducing methane emissions, this punitive rule risked undermining those efforts.”

An analysis by the Congressional Budget Office shows that “Charging for methane emissions leads to an increase in the price of natural gas and a decrease in the quantity of natural gas produced and consumed.”

But environmental groups have argued that the legislation will increase energy costs and disrupt efforts to reduce emissions of a potent greenhouse gas. Nearly 80 environmentalist groups recently sent a letter urging lawmakers to keep the regulation, about to take effect, in place.

The Center Square reached out to multiple environmental groups but received no response in time for publication.

Continue Reading

Business

Trump’s EPA, DOGE join forces to cut Biden era grants totaling $1.7 billion, looking for billions more

Published on

From LifeSiteNews

By Matt Lamb

LaTricea Adams served on President Joe Biden’s Environmental Justice Advisory Council. At the same time, she applied for a grant on behalf of her nonprofit Young, Gifted & Green – and received $20 million, according to the Washington Free Beacon. The grant is about 10 times the annual revenue of the nonprofit…

The Environmental Protection Agency (EPA) continues to cut wasteful grants and programs awarded under the previous presidential administration, saving U.S. taxpayers $1.7 billion.

EPA administrator Lee Zeldin announced the latest cuts on March 10. He is working with the Department of Government Efficiency (DOGE) and Elon Musk on a “line-by-line review of spending,” according to a news release.

While the cuts total $1.7 billion, there is a larger pot the group is seeking to claw back – $20 billion routed through Citibank on for the “Greenhouse Gas Reduction Fund,” according to The Daily Wire.

The fund acted like a piggy bank for favored left-wing groups, with $2 billion going to “Power Forward Communities, a green group linked to Democrat Stacey Abrams,” The Daily Wire reported.

Zeldin has already identified nearly $60 million in ideological grants from the Biden administration for “environmental justice.”

“Additional monies were allocated for DEI training for staff, expanding environmental justice content through the America’s Children and the Environment Program, contractors to advance agency DEI initiatives, and more,” the EPA announced in February. “More savings have been accrued through the agency’s cancellation of outside contractors hired to plan office-wide retreats, and from other contracted work that could be insourced.”

Some of the “environmental justice” grants canceled recently by Zeldin went to well-connected Democrats, according to a Washington Free Beacon report.

For example, LaTricea Adams served on President Joe Biden’s Environmental Justice Advisory Council. At the same time, she applied for a grant on behalf of her nonprofit Young, Gifted & Green – and received $20 million, according to the Washington Free Beacon. The grant is about 10 times the annual revenue of the nonprofit.

The grant would “result in the establishment of the Mid-South Environmental Justice Center with a community advisory board,” according to Democrat Tennessee Congressman Steve Cohen. “It will also help to implement a community engagement plan, coordinated workforce training in green jobs, and hands-on water- and air-quality testing,” a January news release from his office stated.

Democracy Green “is a small mother-daughter operation that has never conducted wetlands restoration or lead pipe removals,” according to the Free Beacon. But the group’s board president, La’Meshia Whittington, served on an EPA advisory committee.

The group pushed back against the accusations, calling the Free Beacon an “obscure publication” that published “outright fabrications.” “Our organization has successfully executed water infrastructure projects in North Carolina, including emergency water support and remediation efforts after natural disasters,” the group wrote to Zeldin. “We own the wetland in question- no funds from the CCG Grant are being used for land acquisition but rather this project will restore an already contaminated creek that runs adjacent to some communities benefiting from the pipe replacement.”

Zeldin’s actions are part of a broader push by President Donald Trump to remove onerous economic regulations pursued in the name of fighting “climate change.”

He has also focused on “unleashing American energy” to bring down the cost of electricity and manufacturing.

“It is thus in the national interest to unleash America’s affordable and reliable energy and natural resources,” he wrote in a day one executive order. “This will restore American prosperity — including for those men and women who have been forgotten by our economy in recent years.  It will also rebuild our Nation’s economic and military security, which will deliver peace through strength.”

To fulfill this promise, Zeldin announced a “deregulatory effort” to “bring down the cost of living,” according to Breitbart.

“We will bring down the cost of living. It’s going to be easier to heat your home, to purchase a vehicle, to operate a business,” Zeldin told the outlet over the weekend.

“I’ve been told that we’re going after the holy grail of the climate change religion, and I would just say this: that we can protect the environment and grow the economy. It’s not a binary choice,” he said. “We don’t have to just choose one. The Trump administration chooses both.”

Continue Reading

Trending

X