US Trade Secretary Wilbur Ross has warned that the White House would “respond” to the EU floating a carbon tax on the United States with punitive measures against Brussels, the Financial Times reported, citing comments that the official made while speaking to the edition at the World Economic Forum in Davos.
“Depending on what form the carbon tax takes, we will react to it — but if it is in its essence protectionist, like the digital taxes, we will react”, Ross contended.
The trade secretary’s rhetoric closely follows heated debates on the carbon emissions issue, arguably a top priority under the new European Commission headed by Ursula von der Leyen.
Since POTUS Trump declared the US’ pull-out from the Paris Climate Accord, both the EU and the US have been at odds on which direction to take in tackling climate issues and reducing emissions. However, the conflict hasn’t yet outgrown the climate framework into global trade.
Officials said there could be found common ground in areas ranging from agricultural commerce to energy and technology. However, the possibility of new outbursts is believed to still be there, as the US threatened to impose tariffs on the EU automotive industry, bringing up earlier warnings.
This past week, Mrs von der Leyen summarised how a flagship green bargain programme would have to involve some fixed carbon limit rules or penalties to ensure that trade benefits and revenues aren't nullified by carbon dioxide costs embedded in imports.
Earlier, Europe voiced plans to collect tax from technology giants, prompting the US government to threaten France with tariffs on cheese, and the UK – with “random” tariffs on cars.
The subsequent tensions were slightly eased right before the Davos gathering, as US President Donald Trump and his French counterpart Emmanuel Macron agreed on Sunday, 19 January that Paris would put its proposed digital tax on the shelf until 2021 in exchange for a ceasefire on US retaliatory tariffs.