The Foreign Pollution Fee Act: What You Need to Know

By Elissa Tennant

With tariffs dominating the headlines in recent weeks, Americans and members of Congress alike are thinking more than ever about one issue: trade.

Trade isn’t just about the economy. It’s intimately connected to climate change. Trade policy is a lever America can use to try to influence other countries to take certain actions. The right kind of trade policy could be used to encourage other countries to produce goods through cleaner, more environmentally friendly processes.

Two Republican Senators clearly see the potential for trade to have a positive influence on global pollution reduction. Earlier this month, Senator Bill Cassidy (R-LA) and Senator Lindsey Graham (R-SC) introduced an updated version of the Foreign Pollution Fee Act.

“It is long past time that the polluters of the world, like China and others, pay a price for their policies,” said Sen. Graham in a press release. “This bill calls out the foreign polluters and rewards American businesses who are doing the right thing.”

“There’s a nexus between climate, national security, economic security and energy policy,” Sen. Cassidy said at an event to announce the bill’s introduction. “You can achieve all four. And that’s the goal of this policy.”

The bill places a fee on imported goods based on the level of greenhouse gas emissions it takes to produce them. It’s a durable trade policy that incentivizes cleaner products and encourages foreign polluters to lower emissions in their manufacturing processes. 

If you’ve been around CCL for a while, you might recognize this general idea already. The concept of a “border carbon adjustment” or “carbon border adjustment mechanism” (CBAM) has been part of our advocacy since our earliest days. Though there are subtle technical distinctions between CBAMs, “carbon tariffs,” and “foreign pollution fees,” they describe a similar idea: Trade policy that aims to put a price on the extra climate pollution produced by imports from other countries.

CCL’s Research and Government Affairs staff have taken a close look at the bill language in the Foreign Pollution Fee Act and are confident that this legislation would reduce carbon pollution while promoting transparency and fairness in global trade.   

“Citizens’ Climate Lobby welcomes the re-introduction of the Foreign Pollution Fee Act by Senator Bill Cassidy and Senator Lindsey Graham. Foreign polluters should be held accountable for the climate impacts of their exports to the U.S., and this bill takes a critical step in ensuring that imported goods reflect their true carbon cost,” said Jennifer Tyler, CCL’s VP of Government Affairs, in a recent statement endorsing the bill. “We are pleased to see this important bill reintroduced and our grassroots volunteers nationwide will be working toward its passage in Congress.”

Let’s take a closer look at CCL’s past advocacy around climate and trade, and how fees or tariffs can be applied to steer the whole world toward a lower-carbon future.

Background in Congress

In 2021, Sen. Chris Coons (D-DE) and Rep. Scott Peters (D-CA-50) introduced the bicameral FAIR Transition and Competition Act, which would have established a border carbon adjustment (BCA) on carbon-intensive imports. The legislation was intended to incentivize other countries’ investments in cleaner technology and lay the groundwork for more ambitious climate policies in the future. 

In 2022, a group of Senate Democrats led by Sen. Sheldon Whitehouse (D-RI) introduced the Clean Competition Act. Similar to the FAIR Act, this legislation sought to establish a CBAM and set domestic standards for pollution.

Then, in 2023, we saw the first iteration of the Foreign Pollution Fee Act from Senators Cassidy and Graham. At the time, Politico noted the Republican leadership, saying the legislation “represents the first GOP-led proposal to inject climate change policy into U.S. trade rules.” 

In 2024, CCL Research Manager Dana Nuccitelli gave a CCU training comparing and contrasting these three bills. While they all used different language and gave slightly different reasoning, each one proposed a type of fee to incentivize lower emissions on goods imported into the United States.

Also in 2023 and 2024, we lobbied for the PROVE IT Act, which would have directed the Department of Defense to gather accurate info on America’s manufacturing of certain products so we can negotiate effectively with trading partners who want to implement CBAMs. Our 2023 lobby day saw 895 in-person attendees who held 436 meetings with Congress where the PROVE IT Act was a primary legislative ask. The bill went on to pass its Senate committee after months of support from CCL. 

At our Summer 2024 Lobby Day, we once again lobbed for the PROVE IT Act, and the House version was introduced soon after. We kept up the discussion of foreign pollution fees at our Conservative Climate Leadership Conference and Lobby Day this past March.

What is motivating Congress to explore this policy approach? 

Major trading partners of ours — namely the European Union (EU) and United Kingdom (UK) — are moving ahead with this type of policy and have been for years. 

In 2020, the EU officially announced a CBAM policy set to go into effect in 2023. In 2021, the EU released further details on the CBAM, threatening U.S. export sales and jobs. In October 2023, the EU CBAM reporting phase officially began. The full EU CBAM is set to go into effect throughout 2026-2028. Guidelines for all affected industries will be released in 2026 and businesses are expected to comply by 2028. 

The UK also announced plans for a CBAM in 2023, set to go into full effect by 2027. 

What’s next for the new Foreign Pollution Fee Act?

Trade policy is a hot topic right now in America, and we’re looking forward to entering that conversation by supporting the Foreign Pollution Fee Act’s passage through Congress. It’s a durable trade policy, rather than an executive order, that incentivizes foreign polluters to lower emissions in their manufacturing practices. Here’s what you can expect from CCL in the next few months in support of this bill:

• Happening now: Right now, if you live in South Carolina or Louisiana, send Senator Graham or Senator Cassidy a quick message thanking them for introducing this bill. 

• Up next: Plan to attend a training from CCL’s Research Director, Dana Nuccitelli, and Policy Fellow, Danny Richter, on May 22. Dana and Danny will outline the finer points of the bill and its potential emissions reductions. RSVP for the training here.

• This summer: Join us for CCL’s Summer Conference, where we will lobby Congress in support of major legislative initiatives, like the Foreign Pollution Fee Act, at our annual Lobby Day. Registration is open now.

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