WASHINGTON -- Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a "weapon" to protect U.S. manufacturing, just a day after one of China's top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.
Energy Chief Says U.S. Is Open to Carbon Tariff
Mr. Chu, speaking before a House science panel, said establishing a carbon tariff would help "level the playing field" if other countries haven't imposed greenhouse-gas-reduction mandates similar to the one President Barack Obama plans to implement over the next couple of years.
"If other countries don't impose a cost on carbon, then we will be at a disadvantage...[and] we would look at considering perhaps duties that would offset that cost," Mr. Chu said.
Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, told Dow Jones Newswires Monday that a carbon tariff would be a "disaster," would prompt a trade war and wouldn't be legal under World Trade Organization agreements
"It does not abide by the rule of [the] WTO and, secondly, it's not fair," Mr. Gao said, adding that his delegation would relate China's concerns to U.S. officials.
The carbon tax issue is important to energy-intensive U.S. industries -- including paper, cement, fertilizer, steel and glass manufacturers -- that worry that costs imposed by climate-change laws will put them at a disadvantage to rivals in nations that aren't bound by similar requirements.
European Union officials are considering a similar tariff, prompting some developing nations to caution that trade restrictions run the risk of retaliatory action.
China is seeking to require importers of its carbon-intensive goods to bear the emission costs, concerned that targets such as those proposed by the U.S. would cripple the nation's growth as an industrializing nation.
