The Carbon Border Adjustment forefronts global climate leadership – revitalizes US economic competitiveness, strengthens US-EU relations, and deters Chinese militarization.

For the US, the Carbon Border Adjustment Mechanism has a significant potential to revitalize and promote the domestic economy, especially many industrial sectors that have struggled recently. According to the Climate Leadership Council, US goods are “40% more carbon efficient than the world average,” and over three times more carbon efficient than China. Implementing CBAM legislation would further improve US competitiveness by monetizing its relative efficiency. It would also bring back a significant amount of business and may improve the decades-long huge trade deficit between Washington and Beijing.

As other low-emission countries begin to use the CBAM, any delay in implementation could put US trade at a considerable disadvantage. Joining the CBAM initiative would place the United States at the forefront of global climate leadership and set a strong example of a modern sustainable economy while countering the environmental impact of global emissions from industrial production. This shared initiative would also likely strengthen diplomatic and trade relations with the EU by streamlining trade and climate policy in the transatlantic region. As the EU is virtue signaling its stalwart support for CBAM, proposing it in the US may also make it a valuable bargaining chip in future trade talks with Brussels.

US legislators on both sides of the aisle must negotiate the details for any American CBAM. While partisan deadlock means swift legislative action from Congress to respond to all energy and climate needs is unlikely, legislators can still leverage very different priorities to arrive at a bipartisan compromise. For Republicans, who have done a drastic about-face on tariffs and protectionism in the last 10 years, and are returning from free trade to protectionism and mercantilism, the CBAM is a popular way to simultaneously protect American jobs and manufacturing while gingerly dipping the toes in the climate change waters.

For Democrats, who are historically more vocal about decarbonization, CBAM allows America to move more in line with the stalled Paris Agreement while reaching its 2030 emission reduction goals. A CBAM also aligns with Democratic legislation such as the 2021 FAIR Transition and Competition Act which promotes international cooperation on regulating carbon emissions, and the 2022 Clean Competition Act (CCA), which reflects a commitment to climate change through sustainable trade.

For both parties and foreign policy practitioners, CBAM is also a tool to counter China.

“Once people understand that [CBAM] is a geopolitical tool, and it’s a lot better than war, it’s a lot cheaper than war, in terms of addressing the militarization of China, and it helps our workers and helps our industry, then they kind of get behind it” argues Senator Bill Cassidy (R-LA). Beyond directly containing China, a CBAM will provide a lot of strategic flexibility for the US in erecting fees and de-facto tariffs that will not impact the broad contours of the international economic order.