It is widely understood that trade protectionism is bad economic policy, and that such policies significantly contributed to the Great Depression. Energy Secretary Steven Chu is ignoring this wisdom, as he has suggested using tariffs on countries who do not commit to cutting carbon emissions.
What he’s talking about is keeping money from leaving the U.S. because other countries have less environmental restrictions that would make operations cheaper. To avoid that transfer, Chu is suggesting a penalty on foreign countries to pressure them into adopting similar environmental policy. As the editorial correctly notes, however:
The Chinese certainly heard Mr. Chu, with Xie Zhenhua, a top economic minister, immediately responding that such a policy would be a “disaster” and “an excuse to impose trade restrictions.” Beijing’s reaction shows that as a means of coercing international cooperation, climate tariffs are worse than pointless. China and India are never going to endanger their own economic growth — and the chance to lift hundreds of millions out of poverty — merely to placate the climate neuroses of affluent Americans in Silicon Valley or Cambridge, Massachusetts. And they certainly won’t do it under the threat of a tariff ultimatum.
Forcing the global economy to shrink to go along with the radical environmental policies pursued by the U.S. would be devastating for the entire global economy. We do not want to start trade wars with countries when we can be doing mutually beneficial business with them. Chu is suggesting extreme environmental priorities that would economically harm everyone, and foolish means for pressuring everyone else into following.
The rest of the world is obviously not on board with the President’s agenda. As the G20 approaches, Germany and Spain are opposing the massive government spending pushed by the US and Britain. It seems that some nations aren’t ready to destroy the economy to expand left-wing priorities.
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