Research On The Impact Of Carbon Tariff On Chinese Export Trade And The Countermeasures Of China

In recent years, global warming has become more severe. Developed countries which have advanced low-carbon technologies proposed carbon tariff and border tax adjustment for that developing countries have not taken the responsibility of reducing carbon emissions. Carbon tariff will have significant negative effect on China’s exports. Therefore, research on the coping strategies of our government and firms under carbon tariff is of great importance.Based on the actual situation of China and in order to achieve the economic, environment and social benefit in the same time, this paper uses game theory to analyze the impact of, two kinds of carbon tariff on China’s social welfare and international trade. In the case of direct carbon tariff, we build a dynamic game model between the two countries and the two enterprises considering the subsidy policy of China and the emission-reduction R&D decision of Chinese firm. In the case of border tax adjustment, we build a game model between developed countries with emission reduction policy and China which has no emission reduction policy. Solving each model and we get the optimal decisions of each entity. Theoretical analyses describe the characteristics of the results. Numerical analyses by MATLAB are then use to prove and perfect the theoretical results. Finally, we put forward some reasonable suggestions for our government and firms to deal with carbon tariff.Results show that carbon tariff can promote the emission-reduction behavior of firms and therefore improve the environment. But the international trade between the two countries will be negatively affected. Tariff and subsidy policies can effectively improve the competitiveness of each country’s firm respectively. Moreover, excessive government intervention will affect the normal order of the market. For our country, the subsidy policy can surely promote emission-reduction behavior of firms. The more obvious the cost advantage is, the better the effect is. At the same time, the unilateral carbon tax does reduce the welfare of the developed countries and the competitiveness of its products. Meanwhile, unilateral carbon tax could not benefit the environment. The border tax adjustment can effectively adjust and balance the different environmental policies between countries, while the optimal adjustment rate is related to the carbon emissions of firms. In addition, a reasonable border tax adjustment policy is beneficial to the social welfare of all countries. Conclusions of this paper are of great significance to the decision of government policy and the choice of firm’s production strategy.