Tariffs and Carbon Emissions

Daniel Yuichi Kono

International Interactions, 2017, vol. 43, issue 6, 895-919

Abstract: International trade and the environment are uneasy partners. Both environmentalists and free traders worry that the pursuit of one goal may obstruct the other. Nowhere is this tension more evident than in the area of climate change. Does trade liberalization increase carbon emissions? Do efforts to reduce carbon emissions lead to protectionist pressures? This paper addresses these questions by examining the relationship between CO2 emissions and tariffs in 109 to 153 countries from 1988 to 2013. Using instrumental-variable regressions to address reciprocal causation, I find that emissions reductions led to higher tariffs on manufactured goods. This suggests that carbon-intensive industries responded to carbon restrictions by lobbying against trade liberalization. In contrast, emissions did not affect tariffs on less carbon-intensive primary products, and neither type of tariff affected CO2 emissions. My results imply that efforts to combat climate change may obstruct trade liberalization, but the latter should not hinder climate change mitigation.

Date: 2017
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DOI: 10.1080/03050629.2017.1311257

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