Carbon Letters

, Volume 29, Issue 1, pp 99–107 | Cite as

Feasibility analysis of China’s carbon taxation policy responding to the carbon tariff scheme of USA

  • Linrong Zhang
  • Dan Jiang
  • Muhammad ImranEmail author
Original Article


Aimed at determining whether China’s active carbon emission reduction policy can respond to the threat of carbon tariff of the USA, this study proposed two kinds of carbon tax schemes for the USA and China, same carbon tax policy and a differential carbon tax policy. Four scenarios are set: the USA only charging carbon tax on domestic products; the USA charging carbon tax on domestic products and carbon tariff on imported products from China; the USA and China taking the same carbon tax policy on domestic products; the USA and China taking the differential carbon tax policy on their domestic products. Global Trade Analysis Project Energy model is applied to discuss whether China’s active measure to reduce carbon emissions can be an effective solution to the threat of carbon tariff of the USA. The research results show that China’s active measure of the same carbon tax policy as the USA is not effective to cope with carbon tariff of the USA. However, it is an effective measure to take a differential carbon tax policy. The specific policy implications of the study are discussed in conclusion.


Carbon tariff GTAP-E model Active carbon emission reduction Differential carbon policy 



This research is supported by the National Natural Science Fund (71572071), the China Postdoctoral Science Foundation funded Project (2015M571708), the Research and Practice Project of Teaching Reform of Graduate Education in Jiangsu Province (JGZZ1_056), the Advanced Talent Project of Jiangsu University (09JDG050 and 14JDG202) and the Postgraduate Research and Practice Innovation Program of Jiangsu Province (KYCX17_1742).

Compliance with ethical standards

Conflict of interest

No potential conflict of interest relevant to this article was reported.


  1. 1.
    Chen LJ, Zhu L, Fan Y, Cai SH (2013) Long-term impacts of carbon tax and feed-in tariff policies on China’s generating portfolio and carbon emissions: a multi-agent-based analysis. Energy Environ 24(7–8):1271–1293CrossRefGoogle Scholar
  2. 2.
    Matthias M (2009) Germany calls carbon tariffs “eco-imperialism”[EB/OL].
  3. 3.
    Bordoff J (2008) The threat to free trade posed by climate change policy. Geneva Trade and Development ForumGoogle Scholar
  4. 4.
    Lockwood B, Whalley J (2010) Carbon-motivated border tax adjustments: old wine in green bottles? World Econ 33(6):810–819CrossRefGoogle Scholar
  5. 5.
    Mckibbin WJ, Wilcoxen PJ, Braathen NA, Levinson A (2008) The economic and environmental effects of border tax adjustments for climate policy [with comments]. Brook Trade Forum 2008(2008):1–34Google Scholar
  6. 6.
    Gerlagh R, Liski M (2017) Carbon prices for the next hundred years. Econ J. Google Scholar
  7. 7.
    Babiker MH (2005) Climate change policy, market structure, and carbon leakage. J Int Econ 65(2):421–445CrossRefGoogle Scholar
  8. 8.
    Dong Y, Whalley J (2011) Carbon motivated regional trade arrangements: analytics and simulations. NBER Work Pap 28(6):2783–2792Google Scholar
  9. 9.
    Lee et al (2018) Review of the use of activated biochar for energy and environmental applications. Carbon Lett 26(1):1–10Google Scholar
  10. 10.
    Saud S, Chen S, Haseeb A (2018) Impact of financial development and economic growth on environmental quality: an empirical analysis from belt and road initiative (BRI) countries. Environ Sci Pollut Res. Google Scholar
  11. 11.
    World Bank (2007) International trade and climate change. World Bank, Washington DCCrossRefGoogle Scholar
  12. 12.
    Niu Y, Chen W, Wu Z (2013) The economic and environmental impact on China of carbon tariffs based on gage model. Energy Environ 24(7–8):1295–1307CrossRefGoogle Scholar
  13. 13.
    Shao JC (2011) The protective nature of carbon tariff and its influence on the exports of developing economies. Econ Surv 04:81–85Google Scholar
  14. 14.
    Shen KT, Li G (2010) The impacts of carbon-motivated border tax adjustment to China’ s industrial exports: a CGE based analysis. Finance Trade Econ 01:75–82Google Scholar
  15. 15.
    Chen HL, Ji YY (2015) Economic effects of US-imposed carbon tariffs on sino-american trade-an empirical study based on GTAP model. Rev Econ Manag 31(03):53–59Google Scholar
  16. 16.
    Yang LQ, Ma M (2011) GTAP simulation analysis of the effect of carbon tariffs on chinese export trade. J Shanghai Univ Finance Econ 2011(5):75–81Google Scholar
  17. 17.
    Wang M, Liu J, Chan HL, Choi TM, Yue X (2016) Effects of carbon tariffs trading policy on duopoly market entry decisions and price competition: insights from textile firms of developing countries. Int J Prod Econ 181:470–484CrossRefGoogle Scholar
  18. 18.
    Yan D, John W (2010) Carbon, trade policy and carbon free trade areas. World Econ 33(9):1073–1094CrossRefGoogle Scholar
  19. 19.
    Long X, Chen Y, Du J, Keunyeob O, Han I (2017) Environmental innovation and its impact on economic and environmental performance: evidence from Korean-owned firms in China. Energy Policy 107:131–137CrossRefGoogle Scholar
  20. 20.
    Luo Y, Long X, Wu C, Zhang J (2017) Decoupling CO2 emissions from economic growth in agricultural sector across 30 Chinese provinces from 1997 to 2014. J Clean Prod 159:220–228CrossRefGoogle Scholar
  21. 21.
    Peterson EB, Schleich J (2007) Economic and environmental effects of border tax adjustments. Work Pap Sustain Innov 68(4):403–420Google Scholar
  22. 22.
    Zhou X, Yano T, Kojima S (2013) Proposal for a national inventory adjustment for trade in the presence of border carbon adjustment: assessing carbon tax policy in Japan. Energy Policy 63(6):1098–1110CrossRefGoogle Scholar
  23. 23.
    Hu GZ, Zhang L (2010) Trade and environmental effects of border carbon adjustment based on partial equilibrium. Int Econ Trade Res 26(11):62–67Google Scholar
  24. 24.
    Lin BQ, Li AJ (2010) The effect of carbon tariffs on developing countries. J Financ Res 12:1–15Google Scholar
  25. 25.
    Luan H, Yang J (2014) Emission reduction and economic impact of US carbon tariff on China. China Popul Resour Environ 24(01):70–77Google Scholar
  26. 26.
    Chen W, Guo Q (2017) Assessing the effect of carbon tariffs on international trade and emission reduction of China’s industrial products under the background of global climate governance. Sustainability 9(6):1028CrossRefGoogle Scholar
  27. 27.
    Zhou Y, Gong DC, Huang B, Peters BA (2017) The impacts of carbon tariff on green supply chain design. IEEE Trans Autom Sci Eng 14(3):1542–1555CrossRefGoogle Scholar
  28. 28.
    Mathiesen L, Mœstad O (2004) Climate policy and the steel industry: achieving global emission reductions by an incomplete climate agreement. Energy J 25(4):91–114CrossRefGoogle Scholar
  29. 29.
    Burniaux JM, Truong TP (2002) GTAP-E: an energy-environmental version of the GTAP model. GTAP technical papersGoogle Scholar
  30. 30.
    Armington PS (1969) A theory of demand for products distinguished by place of production. Staff Pap 16(1):159–178CrossRefGoogle Scholar

Copyright information

© Korean Carbon Society 2019

Authors and Affiliations

  1. 1.School of Finance and EconomicsJiangsu UniversityZhenjiangPeople’s Republic of China
  2. 2.School of ManagementJiangsu UniversityZhenjiangPeople’s Republic of China

Personalised recommendations