Time to Tax “dirty” Imports Into the USA

Posted On 7th December 2022

As US businesses have had to compete with less regulated and more polluting competitors overseas they have either gone out of businesses or become import distributors for their overseas competitors.

We have seen loggers in Oregon, who were the most productive loggers in terms of board feet harvested than any loggers in the world, being replaced by incredibly polluting and unproductive Brazilian loggers who have burned the rainforest and “hi-graded” - taking just the very best logs.

We’ve also seen relatively environmentally clean US sawmills producing quality hardwood for flooring in the USA replaced by incredibly polluting Brazilian factories/shacks that don’t dispose of the solvents used properly and burn who knows what directly into the air. This isn’t to pick on Brazil. China is said to underreport the amount of air pollution they are creating and it is well known their factories are less regulated and rely on much dirtier energy than US factories. I am sure also that Vietnam isn’t enforcing US clean air standards on its factories, not to mention OSHA standards.

Senate Democrats proposed a “Carbon Tax” on countries that produce goods cheaper but dirtier than their American counterparts – steel, aluminum, etc. Where should that Carbon Tax go? Such a Carbon Tax should be really a Carbon Regime – where Exporting Countries such as China and India and Russia if they “go green” or as they “go green” the Carbon Tax is lowered. The goal is products produced with as little CO2 as possible – that might still mean lots of Chinese production – but it also might not and might make US manufacturing of certain products economical again if the imported price of the competition is that much higher.

There is a question of “how much of a carbon tax” to apply to each different type of product – it is a complicated question. May be an impossible analytical task. If we are not careful we will just increase the costs to US consumers while not supercharging domestic production.

We want to target for sure the imports from overseas that we do from factories in regions relying on coal for electricity production. Then calculate how much of an advantage those factories have over their USA counterparts who rely on natural gas or nuclear or some cleaner form than coal. If the US factories also rely on Coal burning, such as if they are in Utah, then their industry should not qualify for protection. If there are no US producers of that raw material or good anymore, than don’t put a tariff on it; it will only impoverish US consumers or industrial buyers. Be practical.

In the oil and gas world is there any way to punish imports that are dirtier than domestic production and punish them in a proportional way to domestic producers? So if Russia’s crude oil is produced by a method or supply chain 10% dirtier than that of the USA’s domestic production, can we/with others in the world carbon tax their product by 10% in order to encourage Russia to produce by cleaner methods?

The world is a complicated mess right now and while there are no easy answers especially with a polarization of the electorate, reasonable people even on opposite sides of the political spectrum can come together and make good policy in areas where they have the same goal. Green Democrats and “America First” Republicans would both win with some type of “carbon tax” on imported goods – with the revenue collected from the “carbon tax” paying down the national debt directly.

Why would a 3PL i.e. internet broker of Less Than Truckload (LTL) and Full Truckload (FTL) shipments care about and even support a tax on imports coming from polluting nations? We think overall it will be good for US manufacturing and thus will increase production and shipping within the USA.

We also think it will increase the supply chain’s resilience. Re-shoring US manufacturing back to the USA, close to customers and markets, leads to other synergies and efficiencies and certainly to a revitalizing of the domestic economy with all that means to tax revenues (increases) and jobs. The Commerce Department has realized this and has formed the Manufacturing Extension Partnership (MEP) which aims to accelerate on-shoring by encouraging cooperation between manufacturers and other businesses, government agencies that might be of specific help, and universities and research institutions.

Freight Run supports the on-shoring movement or dynamic and with repeat manufacturing clients offers a “partnership level discount” which competes usually beats manufacturing coop and association “Coop Shipping Rates” by more than twenty percent.

If you are a manufacturer or ship extensively from one, after you register at FreightRun.com let us know and we will put you in for our “partnership level discount.” This is not available from Ports of Entry ie for imports but for all US production or factory locations.