Impacts Of Carbon Tariffs Imposed By The US On China's Economy And Carbon Emissions

The US House of Representatives passed a ‘border adjustment tax' on imported products on June 26,2009,which means that the carbon tariffs policy will be implemented by the USA in 2020.China is one of America's biggest trade partners,so its economy,trade,energy consumption,carbon emissions and social welfare will be influenced by carbon tariffs.Thus,this paper constructs a multi-sectoral dynamic computable general equilibrium?DCGE? model with the characteristics of China's trade structure,energy structure,output structure,carbon intensity and social welfare,simulating on GAMS softeare,and designs carbon tariffswill be imposed by the USA at levels of $40/t CO₂,$50/t CO₂,$60/t CO₂?the single carbon tariffs policy?,carbon tariffs and domestic carbon tax policy?tax policy combination?,carbon tariffs and export subsidy policy?subsidy policy combination?21 combination scenario simulation settings to analyze the long-term changes of China's economic structure,carbon emissions and social welfare under different emission reduction policies from 2020 to 2030.This study comprehensive assessment and comparison of the impacts on China may be caused by the carbon tariffs policy and this policy under China levying domestic carbon tax and implementing export subsidy policy,in order to propose suitable strategies to allow China to deal with carbon tariffs in a scientific manner and avoid the negative impacts of carbon tariffs,as well as providing a theoretical basis and reference for policy.Simulations show that the single carbon tariffs policy,tax policy combination and subsidy policy combination will have an impact on China's trade structure.All of them will increase China's exports to other countries or regions instead of the USA,promoting trade diversion,will affect the distribution of international interests and the world economic and trade pattern,the degree of influence is positively correlated with the carbon tariffs' rate.The single carbon tariffs policy play an important role in China's export structure through the China-US trade channels directly,which has great impacts on China's regional export structure.However,China's domestic carbon tax to some extent will alleviate the impacts of carbon tariffs on China's regional export structure.Tax policy combination could reduce the energy-intensive products export proportion to improve China's commodity export structure and reduce foreign trade dependence and export dependence,whereas policy combination would reduce the power of China to develop new market outside the USA.Subsidy policy combination will weaken the effects of carbon tariffs directly by lowering tax rates.On the whole,the trend of the impacts of subsidy policy combination on the structure of China's export trade will be similar to that of the single carbon tariffs policy,and the influence range of subsidy policy combination will be weaker than that of the single carbon tariffs policy and tax policy combination.The single carbon tariffs policy and tax policy combination could play a role in improving China's energy structure,but there are differences between the two.They will decline the proportion of coal consumption dramatically and increase the proportion of clean power consumption through the price mechanism.However,Tax policy combination will not only greatly reduce coal consumption ratio,but also could work on other energy obviously.The effects of single carbon tariff and tax policy on China's industrial output structure are different.Tax policy combination will make the output share of most sectors decreased including high export dependences,energy-intensive and upstream sectors.In contrast,the impacts of the single carbon tariffs policy on China's industry output structure is slight.However,the impact of subsidy policy combination on China's energy structure and output structure will be inferior to the other two kinds of policies.While the single carbon tariffs policy will not be the most effective measure to reduce carbon emissions,to a certain extent,it would have a negative impact on social welfare.The impacts of carbon tariffs on China's emission reduction could be inferior to domestic carbon tax,which is also to decreasing carbon intensity.To so extent,export subsidy policy could weaken the carbon tariffs' reduction effect.On the whole,domestic carbon tax policy would have greater impacts on China's economy,environment,and social welfare compared with the single carbon tariffs policy.Finally,this paper puts forward some policy implications that emerge from our study results.