The $ 3.5 trillion reconciliation spending plan currently under scrutiny by Congress includes the country’s first carbon marginal tax to be levied on foreign goods, but the White House has expressed support over concerns that this will lead to an increase in the Cost of living, reported Reuters.
While the details of the tax would have to be set by the White House, it would collectively be levied on foreign imports based on the product’s carbon footprint. Companies that want to sell concrete, steel, aluminum or other raw materials to the USA would have to pay a tariff if their country imposes fewer regulations on CO2 reduction than American companies.
However, the White House raised concerns that the introduction of this carbon tax would increase the price of goods as other countries could impose retaliatory tariffs if affected. This in turn would have an impact on raw material prices, which would then be passed on to consumers. Such price increases could serve to undermine President Biden’s election promise not to impose taxes on those who earn less than $ 400,000 a year.
The White House is therefore planning not to support the measure so far, as it is coordinating with allies such as the European Union, which wants to introduce its own CO2 tax.