We all know that Europe and North America import billions of dollars of goods from China. In April alone, the US recorded a trade deficit with China of $16 billion dollars. China’s reliance on high emission energy and destructive environmental practices mean that the west is also a major exporter of pollution.
China has so far refused to set an emission reduction target and impose taxes or other measures on polluters. If the West is serious about meeting global emissions targets, they could force emission reductions by imposing duties on goods widely regarded as “dirty”. While this is an indirect environmental tax and does not offer incentives for Chinese firms to adopt environmentally efficient technology, it will force China’s hand. Of course, it will drive up the cost of your lead-tainted Thomas the Tank Engine by at least 10 cents, which in my neo-classically trained economist mind is a disaster for “consumer welfare”.