The Victim of the U.S.-China Trade War? Climate Action.

Written by: Michael DeLeers

The United States-China trade war has been a constant headline the past few months. Considering the U.S. and China are the world’s two biggest economies, it makes sense too, for the tariffs they impose on each other have ramifications across the globe. However, there is one unmentioned victim of the trade war: climate change policy. 

To illuminate this, let’s look at an example. Recently, Germany announced a 60 billion dollar package of climate policies meant to reduce its greenhouse emission levels by 2030; specifically, Germany wants to drop its emission levels to 55% of those in the 1990s. This was announced after the September United Nations Climate Summit. It made headlines after 16-year-old climate activist Greta Thunberg’s excoriated world leaders for their failure to implement effective climate policy. Even with the publicity, the outcome of the summit, like Germany’s announcement, seems lackluster: the summit brought no new climate action. Additionally, Germany’s new pledge only came after its failure to reach 40% of its 1990s level by 2020, a goal that would’ve reduced CO2 emissions by around 62-78 million tons. In other words, Germany’s pledge for 2030 comes on the back of a failed pledge for 2020. 

With that said, the reluctance of Germany and other countries to make lofty promises in climate policy seems to be, in some part, a result of economic uncertainty. If the United States-Chinese trade war continues to negatively affect the global economy, then it’s possible some countries may avoid implementing climate policy for the sake of their economic output. Moreover, economic uncertainty paired with a slowing U.S. response to climate policy may further de-incentivize other countries to enact policy. Therefore, the U.S. should consider the adverse effects its trade war and climate stance has on climate change policy across the globe. 

The cost of addressing climate change seems to be an influence on the U.S. relationship with climate change. This makes sense for implementing climate change policy is expensive, and making economic sacrifices for something seemingly in the future, albeit near future, seems understandable. However, taking into account that 2014 through 2019 have been the hottest years on record, the lack of U.S. initiative on climate change is worrisome. Even more worrisome is that the U.S. has gone in the opposite direction by issuing several cutbacks, including plans to cut some regulations on methane emissions, to keep coal plants open longer, and even to restrict California’s ability to make stricter emission guidelines than those of the federal government. In the U.S., these changes seem to be an attempt by President Trump to save money for the oil industries and keep them competitive.

In the context of the U.S.-China trade war, these changes look like an attempt to gain an economic edge. U.S. President Donald Trump, for instance, noted that the U.S. has the world’s largest energy sector and he would not risk U.S. wealth “on dreams [and] windmills, which frankly aren’t working too well”. It seems China acknowledges this sentiment as well when it noted at the UN Climate Summit that it would not be making more climate pledges. China is no longer actively attempting to develop its already in-place climate policies, for it is already complying with the Paris Climate Accords. Considering the U.S. has pledged to leave the Paris Agreement and continues to roll back other policies, it is unlikely that China has any economic incentive to develop climate change policy in the future.

In this light, if the U.S. continues to value economic advantages over climate policy, other countries may start to follow suit; China being one. This is even more problematic considering that the U.S. and China are the world’s two biggest greenhouse gas emitters. If they do not promote change, then even if all countries do their part, which is unlikely, any kind of climate change will be impotent. 

This is even more true considering their economic power. The head of the International Monetary Fund, for instance, noted that the U.S.-China Trade War could cost the global economy $700 billion by 2020. This impact could hurt smaller countries attempting to make climate change like Canada, which has one of the most extensive carbon pricing programs. 

Canada has a nationwide tax on coal, gas, and oil, except in the steel and chemical industries, which have lesser regulations because they are generally more competitive. Keeping steel and chemical companies exempt speaks to the core of the problem. For if Canada continues to regulate its manufacturing sectors while other countries do not, especially the largest emitters, it loses economic competitiveness while making a relatively insignificant change on the climate. For instance, China is the world’s largest steel provider, and if it were to cut regulations on its steel industries, to stay competitive in that industry Canada might have to change its policy direction. 

In sum, if the U.S. wants to continue its economic trade war with China, it should consider the widespread ramifications of its decisions on climate action. If the U.S. continues to destabilize the global economy, more countries may become less inclined to plant the seeds for change. In this light, the U.S. should reconsider the advantages of prolonging a trade war that has wide-ranging ramifications that stretch far beyond just two countries.