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Paris after Trump: An Inconvenient Insight

Author

Listed:
  • Christoph Böhringer

    () (University of Oldenburg)

  • Thomas F. Rutherford

    () (University of Wisconsin)

Abstract

With his announcement to pull the US out of the Paris Agreement US President Donald Trump has snubbed the international climate policy community. Key remaining parties to the Agreement such as Europe and China might call for carbon tariffs on US imports as sanctioning instrument to coerce US compliance. Our analysis, however, reveals an inconvenient insight for advocates of carbon tariffs: Given the possibility of retaliatory tariffs across all imported goods, carbon tariffs do not constitute a credible threat for the US. A tariff war with its main trading partners China and Europe might make the US worse off than compliance to the Paris Agreement but China, in particular, should prefer US defection to a tariff war.

Suggested Citation

  • Christoph Böhringer & Thomas F. Rutherford, 2017. "Paris after Trump: An Inconvenient Insight," ZenTra Working Papers in Transnational Studies 72 / 2017, ZenTra - Center for Transnational Studies.
  • Handle: RePEc:zen:wpaper:72
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2988845
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    More about this item

    Keywords

    Paris Agreement; US withdrawal; carbon tariffs; optimal tariffs; tariff war; computable general equilibrium;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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