Carbon Tax Alert: New Bill Slaps $60/Ton Charge on Industrial Goods Starting 2026, Funds Green Tech Grants

This legislation, the Clean Competition Act, is essentially setting up a massive carbon border adjustment mechanism. Starting in 2026, it imposes a new "carbon intensity charge" on certain industrial goods—think steel, cement, and chemicals—if their production emissions exceed a set benchmark. This charge applies to both goods made here in the U.S. and those imported from overseas. The initial penalty starts high: $60 per ton of carbon dioxide, and that price is set to increase annually by inflation plus a hefty six percentage points. In short, the bill makes it expensive to produce goods using high-emissions methods, aiming to push heavy industry toward cleaner operations.

The Cost of Doing Business: Who Pays the Tab?

For domestic manufacturers of these covered primary goods, the clock starts ticking in 2026. If your factory’s carbon footprint per unit of production is higher than the industry average, you pay the charge. This is a huge new compliance burden for these facilities, requiring them to report detailed emissions data, including how much electricity they use and where it comes from (Section 2). For the average person, this means higher prices are likely coming down the pipeline. When the cost of making steel or cement goes up, the cost of building a car, a bridge, or a house eventually follows. While the goal is to incentivize decarbonization, the immediate impact could be felt in your wallet through increased costs for durable goods and construction.

The Import Maze: Foreign Goods Get the Same Treatment

The bill tackles the problem of "carbon leakage"—where U.S. companies move production overseas to avoid environmental rules—by charging imports too. Starting in 2026, imported raw materials face the charge, and by 2028, finished goods like appliances or cars will also be subject to a fee based on the carbon footprint of the materials used to make them. If you’re an importer, you’re now responsible for figuring out the carbon intensity of what you bring in. If there’s good data, the charge uses the foreign manufacturer’s specific emissions. If not, the Treasury Secretary gets to estimate it based on that country’s overall economy compared to ours (Section 2). This reliance on estimates gives the government significant administrative power and could lead to disputes, especially for importers dealing with countries that lack transparent data.

Buy American, Sell Global: Rebates and Green Cash

There are two significant upsides built into this system. First, if a U.S. manufacturer pays the carbon charge but then exports their product, they get a full refund, or "rebate," for the charge they paid. This is a massive win for U.S. exporters, ensuring they remain competitive globally without being penalized by the new domestic charge. Second, the revenue generated by this carbon charge—which is expected to be substantial—gets funneled into two big pots of money. Twenty-five percent goes toward international climate aid, and another 25% funds domestic industrial competitiveness programs (Section 2). This includes grants and loans to help U.S. companies invest in technology to reduce their carbon intensity by at least 20%. So, while the bill imposes a cost, it also offers a substantial financial incentive and resources to help industry clean up its act.

The Global Game: Carbon Clubs and Trade Deals

The bill also authorizes the President to negotiate "carbon club" agreements with other countries. The idea is to create a group of nations that agree to similar carbon measurement and enforcement standards. If a country joins the club and implements policies that have a "commensurate effect" to the U.S. charge, their imports here might be waived from the fee (Section 2). This is a smart move to align global trade with climate goals, but it also means trade deals will now be heavily intertwined with environmental policy. For consumers, this could mean that products from allied, low-carbon countries get a price advantage over those from nations that don't join the club, potentially shifting global supply chains based on climate policy alignment rather than just raw cost.