New Bill Proposes 'Foreign Pollution Fee' on Imports Based on Carbon Emissions

This legislation, the Foreign Pollution Fee Act of 2025, introduces a new fee on certain goods imported into the U.S., starting just six weeks after enactment. The core idea is to charge importers based on how much pollution—specifically greenhouse gases like carbon dioxide—is generated when making those products overseas compared to making similar products here. The fee amount is tied directly to the product's customs value and a 'variable charge' determined by this pollution difference (Section 4692). The stated goal? To counteract what the bill calls an unfair advantage held by manufacturers in countries with lax environmental rules, particularly singling out China and Russia (Section 2), and level the playing field for American businesses facing higher environmental compliance costs.

How the Pollution Price Tag Gets Calculated

The system works by comparing the 'pollution intensity' of an imported product to a U.S. baseline for similar goods (Section 4693). Think of 'pollution intensity' as a measure of greenhouse gas emissions covering the whole production chain—from direct factory emissions to energy used (indirect), materials sourced (precursor), and even transportation (Section 4691, 4694). Products are slotted into tiers: the bigger the pollution difference compared to the U.S. baseline, the higher the fee percentage (ranging from 5% up to 80% or more). Critically, this fee gets doubled or even quadrupled if the product comes from a designated 'nonmarket economy country' (like China) or a facility linked to a 'foreign entity of concern' (Section 4693). Covered products initially include key industrial inputs like aluminum, steel, cement, fertilizer, glass, hydrogen, plus solar components and battery materials (Section 4696). The Treasury Secretary, advised by a new 'Advisory Committee on Global Pollution Challenges' (Section 4697), is tasked with figuring out the complex methodologies for these calculations and publishing the details (Section 4698).

Partnerships, Exemptions, and Potential Headaches

Not everyone pays the same rate. The bill allows the U.S. to strike 'international partnership agreements' with other countries (excluding nonmarket economies) to work together on pollution reduction through trade (Title II, Section 201). Partner countries could see reduced or adjusted fees based on the agreement terms (Section 4695). There are special, more lenient pathways for low and lower-middle-income countries joining these partnerships, including grace periods where no fee applies initially, technical assistance, and phased-in pollution intensity requirements over 15+ years (Section 202, 203). Additionally, individual foreign facilities, if meeting strict verification rules and not located in nonmarket economies or tied to concerning entities, could apply for a facility-specific pollution rating instead of using their country's average (Section 204). While aiming to support U.S. industry, the complexity of tracking emissions globally, verifying data from foreign producers, and managing these partnerships presents significant hurdles. Businesses importing these goods will face new compliance burdens and potentially higher costs, which could ripple down to consumers depending on the product and market dynamics. The bill also includes measures to combat 'evasion,' like manipulating carbon removal claims or shifting production (Section 4693, 4694), but policing this internationally will be challenging.