How Biden Could Use Trump’s Trade War Thumbscrews to Fight Climate Change
Fortunately for supporters of aggressive action on global emissions, Trump has demonstrated a highly effective way to circumvent the legislative process.
Over the past two years, the view that the United States must take drastic action to address global climate change has gained strong support within the Democratic Party. In the U.S. Congress, 100 Democratic Representatives and 14 Senators have endorsed the Green New Deal, while presumptive Democratic nominee Joe Biden has called for spending $2 trillion to transform the economy in order to reduce greenhouse gas emissions and remove fossil fuels from the electricity supply by 2035. But even if Democrats win the election in November, continuing political dysfunction in Congress could stall legislative action to address what is arguably humanity’s greatest long-term challenge.
Fortunately for supporters of aggressive curbs on global emissions, President Donald Trump has demonstrated a highly effective way to circumvent the legislative process. His use of national security laws to impose tariffs and sanctions sets a precedent for a future Democratic president to address climate change even if Congress fails to act. I have argued elsewhere that Trump has overused U.S. sanctions laws and that Congress should urgently enact procedural reforms to rein this in. But Congress has shown no inclination to limit presidential powers. The Supreme Court recently refused to hear a legal challenge to Trump’s tariffs on steel imports, leaving in place a broad lower court ruling affirming the president’s authority to impose tariffs based on his own interpretation of what constitutes a national security threat. That has created a clear opening for a future Democratic president to impose wide-ranging tariffs and sanctions to combat climate change.
There are at least four ways a Democratic president could use Trump’s favorite national security tools to address the climate crisis: tariffs on emissions-intensive products and countries; reporting requirements on international investments; limits on investing in carbon-intensive industries; and sanctions and export controls on the most damaging projects. These actions could complement domestic regulatory action to limit carbon emissions by the U.S. energy and transportation sectors, and to rejoin the 2015 Paris Agreement on CO2 reductions. While using national security laws to combat climate change would be no substitute for new legislation and would be virtually certain to face legal challenge, the credible threat of unilateral action by the executive branch could spur Congress to act.
Tariffs on carbon-intensive products and countries: Any unilateral U.S. greenhouse gas reduction scheme runs the risk that tough anti-emission rules could give an advantage to companies operating in countries with looser regulation, thereby simply driving manufacturing away from the United States to countries that fail to act to address climate change. This concern has already prompted the Biden campaign to announce support for a border adjustment tax on imports of carbon-intensive goods, something that the European Union is also considering. Trump’s resurrection of long-standing national security clauses in U.S. trade law to impose tariffs provides a future Democratic president with a blueprint to impose a border adjustment tax even without congressional action.
Trump deployed Section 232 of the Trade Expansion Act of 1962 as the legal basis for tariffs on U.S. imports of aluminum and steel. That clause authorizes the Commerce Department to investigate imports to determine whether goods are being imported “in such quantities or under such circumstances” that they impair national security. Under a Democratic president, the Commerce Department could investigate—as several Democratic Representatives have already recommended—carbon-intensive imports, and determine that these emissions in other countries impair U.S. national security. This would then serve as the legal basis to impose tariffs or other restrictions on these imports.
Section 301 of the Trade Act of 1974, meanwhile, authorizes a president to impose tariffs on countries that engage in an “unjustifiable” trade practice which “burdens or restricts United States commerce.” Trump has used this clause to impose tariffs on most U.S. imports from China after finding that China’s theft of intellectual property met the statutory threshold. Currently, he is also threatening to use Section 301 to impose tariffs on imports from France and other countries planning to impose taxes on certain digital services, which would predominantly affect U.S. tech giants such as Google and Facebook. A future Democratic administration could find that countries failing to take adequate steps to address climate change are engaging in an unjustifiable practice that burdens or restricts U.S. commerce by undercutting companies that are subject to tougher regulations. This would allow the president to impose tariffs on imports from countries that failed to meet global climate change commitments, such as those made in the 2015 Paris Agreement.
Global climate impact reporting requirements: A growing number of financial institutions have begun to assess the carbon impact of investments. The CEO of BlackRock, for example, has committed to “making sustainability integral to portfolio construction and risk management.” Even central banks and financial regulators are beginning to press commercial banks and investment funds to evaluate the risks that climate change could pose to investments. But regulations regarding impact assessments are spotty and, in the United States, such assessments are largely voluntary.
In 2013, when the administration of then-President Barack Obama unwound sanctions on Myanmar, it required U.S. companies making new investments of $500,000 or more in the country to file periodic reports on the social impacts of their investments. A future Democratic administration could take a similar approach toward new investments in identified high-emissions industries outside the United States, requiring U.S. companies that make investments in such sectors as power generation, industrial production, or even airlines to report publicly on climate impacts and any planned mitigation strategies.
Restrictions on investments in carbon-intensive industries: A Democratic president could also use sanctions authorities to go beyond mere impact reporting to prohibit categories of new investment altogether. The United States’ foundational sanctions statute, the International Emergency Economic Powers Act, authorizes a president to impose a wide range of restrictions in response to “any unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States.” Presidents have deployed this authority against a huge variety of threats, from human rights abuses to drug trafficking to cyberattacks. The potential of catastrophic climate change certainly meets the standard. Much as the Obama administration restricted new investments in certain Russian energy projects in response to Russia’s 2014 invasion of Ukraine, a future Democratic president could use the law to restrict U.S. private investment in various high-emissions projects, such as extracting petroleum from oil sands and agricultural projects involving substantial tropical deforestation.
Sanctions and export controls on severely carbon-intensive projects and companies: Finally, a new president could use U.S. export controls and the International Emergency Economic Powers Act to target individual companies and projects with high emissions around the world. Various experts and several members of Congress have proposed climate sanctions, and former Democratic presidential candidate Bernie Sanders endorsed the concept during his campaign. Given the economic effects and deterrent impact of U.S. sanctions, the mere threat would likely steer domestic and foreign companies away from projects that could expose them to even comparatively low levels of sanctions risk. If targeted sanctions appear a step too far, a Democratic president could use the Commerce Department’s Entity List—which Trump has used to limit U.S. exports to Huawei and other Chinese companies—to prohibit U.S. exports to foreign companies that egregiously contribute to global climate change.
Of course, many of these proposals would be challenging to implement. Identifying the appropriate scope for investment prohibitions and sanctions, for example, would require careful consideration, as would the selection of products upon which tariffs would be imposed. Many foreign governments would see the U.S. actions as highly provocative, especially following the Trump administration’s aggressive trade policies and the United States’ own repudiation of climate commitments. Tariffs could easily fall afoul of World Trade Organization rules, though Trump’s dismemberment of the WTO’s Appellate Body has made any future challenge to U.S. trade actions toothless. Companies would be virtually certain to challenge the proposals in court, which would test whether the Supreme Court’s recent deference to executive branch power under Trump would carry over to a Democrat. And a potential Biden administration would also have to decide whether it really wants to keep expanding the scope of trade and sanctions authority that Trump has already stretched far beyond the laws’ intended purposes.
All that said, global climate change is undeniably a crisis, arguably the single greatest national security challenge the United States faces, and certainly a vastly greater threat than many current targets of U.S. tariffs and sanctions. If Congress refuses to act, would it be unreasonable for a new president to threaten to push the boundaries of his or her authority to protect the planet for future generations?
Peter E. Harrell is an adjunct senior fellow at the Center for a New American Security. From 2012 to 2014, he served as the deputy assistant secretary for counter threat finance and sanctions in the U.S. State Department’s Bureau of Economic and Business Affairs. Twitter: @petereharrell