Discovered: Nov 17, 2025 02:14 (UTC) ME:: tl;dr-ing Tariffs are justified for two reasons: 1. to pay for international freight emissions 2. social, fiscal and environmental dumping 3. ; Thomas Piketty:: Rethinking world trade

QUOTE:

The first reason for implementing tariffs is that international freight generates pollution that accounts for 7% of global emissions. Economists have long underestimated this environmental cost, using a low value for the metric ton of carbon (between €100 and €200). However, the worsening of global warming has led to a reassessment. The costs stemming from emissions – natural disasters, decline in economic activity and so on – are now estimated at about €1,000 per ton, if not more, without even factoring in loss of well-being and non-economic costs. Using this value, one would need to apply average tariffs of around 15% on global trade flows to compensate for warming linked to freight, with significant variations depending on the type of goods.

The second justification for tariffs is social, fiscal and environmental dumping. Some countries apply less stringent regulations than others, allowing producers based there to undercut competitors. In practical terms, China currently accounts for 30% of global emissions, with exported emissions making up about 20% of this (or 6% of the global total). At €1,000 per ton, average tariffs of about 80% would be needed on Chinese exports to account for this environmental cost. If focusing only on net exported emissions (after subtracting imported emissions), which is about 10% of China’s emissions (3% of the global total), the necessary tariffs would be around 40%.

Now to social dumping. Wages account for 49% of gross domestic product in China, compared to 64% in Europe. This distorts competition and would require compensatory tariffs of about 15%. A similar calculation can be made for fiscal dumping, especially regarding corporate taxes and state subsidies.

As with carbon, the aim is not to penalize China per se, but to encourage it to pay better wages, at which point the compensatory tax could be lifted. China has no need to accumulate endless trade surpluses; it should first continue its plans for decarbonization (which are further along than in the US, for example) and increase its wages and domestic demand. In the long run, if the US does not change course, Europe and China will have to impose significant sanctions on it.

In any case, tariffs are not an end in themselves: They can be dispensed with if binding agreements are put in place to achieve the same objectives. They can also be replaced by targeted financial sanctions if those prove more effective. The exact amounts should be determined following thorough democratic deliberation, conducted transparently, ideally within transnational assemblies.

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