Bottom Line on International Trade

This fact sheet from the World Resources Institute examines how varying international climate policies and the imposition of costs on greenhouse gas emissions affect trade competitiveness, specifically focusing on the risks of industry relocation and emissions leakage.

• Climate policies that vary in stringency across nations create non-uniform costs for manufacturers, which may disadvantage specific American industries but could also provide the U.S. economy with an early signal regarding fossil fuel costs and supply constraints to improve future competitiveness.
• The relocation of manufacturing from countries with strict policies to those with lower costs can lead to "emissions leakage," where global emissions rise because emission sources migrate to countries without absolute caps, potentially undermining the environmental effectiveness of domestic policies.
• Industry sensitivity to differentiated climate policies is determined by three factors: the energy intensity of production, the potential for fuel switching or efficiency improvements, and the availability of substitutes. Sectors most likely to be adversely impacted include chemicals, paper, nonmetallic mineral products (such as cement and glass), and ferrous and nonferrous metals.
• Modeling by Resources for the Future suggests that if the United States imposed a $10 per ton charge for CO2 while other countries did not, domestic output from vulnerable industries could decline by 0.5 to 6 percent.
• Three primary policy options exist to harmonize compliance costs: cost containment mechanisms (such as allowance allocations to reimburse exposed sectors), trade measures (such as border price adjustments on imports), and coordinated international actions to encourage trading partners to impose similar costs.

APA

World Resources Institute (n.d.). Bottom Line on International Trade. https://www.wri.org/research/bottom-line-international-trade

Chicago

World Resources Institute. Bottom Line on International Trade. n.d. https://www.wri.org/research/bottom-line-international-trade.

Wikipedia

{{cite report |author=World Resources Institute |title=Bottom Line on International Trade |url=https://www.wri.org/research/bottom-line-international-trade |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendbottom, author = {{World Resources Institute}}, title = {{Bottom Line on International Trade}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/bottom-line-international-trade}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }