Republicans and Democrats are considering implementing a carbon border adjustment mechanism, a charge on imports calculated from the carbon consumed in their manufacture. In doing so, they are preparing to wed one of the oldest economy-killing fads to a much newer one.

Sens. Chris Coons (D-DE) and Kevin Cramer (R-ND) last week introduced legislation that would likely, as Coons suggested, “lay the scientific foundation for moving forward with a carbon border adjustment.” The policy essentially unites protectionism and environmentalism, appealing to Republicans’ rediscovered antipathy toward free trade and satisfying Democrats’ environmental itch by making the import and consumption of goods from foreign lands with less stringent environmental standards costlier. What’s more, it would incentivize foreign manufacturing companies to green up their business practices.

An American CBAM would itself be an import, as the European Parliament and European Council approved one of their own in May. The European Union hopes to fortify its Emissions Trading System, a cap-and-trade system through which European firms purchase carbon-use authorizations, against corporate efforts to dodge ETS charges by offshoring production.

A CBAM, like any other tax or tariff, raises the price of covered goods. The economics are simple. When the seller’s costs increase, he or she relays some, or all, of that increase to the consumer. Moreover, protectionist policies such as this one warp industry’s economic incentives, encouraging firms to evade duties at the cost of operational efficiency. This inflates prices further. Tariffs also invite policy retributions from put-upon trading partners.

America’s recent protectionist bungling serves as a case study. For example, one round of tariffs introduced against China in 2019 cost the typical American household $831 annually, according to projections by the Federal Reserve Bank of New York. Another Fed report , published in May 2020, suggested the recent U.S.-China trade war slashed the market capitalization of observed American firms by roughly $1.7 trillion. The Congressional Budget Office projected that Trump-era tariffs, imposed on several countries, would in 2020 reduce GDP by 0.5% and real household incomes by $1,277.

The United States, unlike Europe, imposes no carbon tax. Nonetheless, environmental regulations impose substantial compliance costs on American manufacturers. Accordingly, the CBAM proposed in 2021 by Coons and Rep. Scott Peters (D-CA) sought “to account for the cost incurred by U.S. businesses to comply with laws and regulations limiting greenhouse gas emissions.”

Lawmakers have been trying to pass some sort of CBAM for the past several years, with little to no regard for these negative effects. Coons and Sen. Bill Cassidy (R-LA) announced a pair of forthcoming CBAM proposals earlier this year. Another more environmentally minded bill , proposed in 2022 by Sen. Sheldon Whitehouse (D-RI), tied the CBAM rate to the exporting nation’s “carbon intensity.” Unlike his colleagues, Whitehouse seeks also to introduce carbon fees for domestic manufacturers as well as foreign ones.

Any CBAM that includes no levy on domestic manufacturers would likely violate America’s international trade obligations and necessitate further harm at home. Article 3 of the General Agreement on Tariffs and Trade , a multilateral agreement enforced by the World Trade Organization, forbids signatories to favor domestically produced products over foreign competition. Imposing a national carbon tax to maintain WTO compliance would only further burden American consumers and industry.

In the event of a violative American CBAM, the WTO may have no meaningful means to object. Both the Trump and Biden administrations for years have blocked the appointment of members to the WTO’s Appellate Body , without which the institution lacks final adjudicative power. Such obstructionism has insulated from accountability all manner of American misbehavior, including blatantly noncompliant steel and aluminum tariffs. Further, in the Inflation Reduction Act passed last year, Congress compounded former President Donald Trump's and President Joe Biden’s efforts to flout the WTO, enacting protectionist sourcing requirements for subsidized electric vehicles.

Protectionism’s recent, bipartisan resurgence spells nothing but higher costs for consumers and industry. Its popularity stems from a disbelief in unintended consequences. Its costs typically fall hardest on the smallest companies and the poorest consumers. “Bigger multinational corporations might have an advantage because they’re the ones that tend to lay out their decarbonization strategy,” noted Shuting Pomerleau, a climate policy analyst for the Niskanen Center. “They probably have already mapped out their emissions footprint and set a target.”

Conservatives typically understand the imprudence of state interventions in the economy and for environmentalist or other causes. Those who have forgotten ought to brush up on their Economics 101 as congressional debates over CBAM proposals unfold.

David B. McGarry is a policy analyst for the Taxpayers Protection Alliance.