A newly introduced US bill—the Foreign Pollution Fee Act of 2025—could shift international trade norms by tying import fees to the carbon intensity of foreign goods. Senators Bill Cassidy and Lindsey Graham are proposing legislation that aims to protect domestic industries facing strict environmental regulations while encouraging cleaner production practices abroad.
Aerial view of a cargo ship and airplane near a forested US coastline. AI generated picture.
The bill proposes a sliding scale of tariffs based on how emissions-intensive imported goods are compared to their US-made equivalents. Heavily polluting exports from countries such as China, Russia, Vietnam, India, and Taiwan—particularly in sectors like steel, aluminium, fertiliser, and glass—could face fees reaching as high as 200%.
According to the bill’s draft, American manufacturers spend an estimated $400 billion annually to comply with environmental rules. The proposed policy is designed to level the playing field and encourage global producers to adopt lower-emission practices. ‘China and Russia, the world’s top polluters’, are cited in the draft for producing goods that emit three to five times more CO₂ than US products.
Notably, the Act allows companies to reduce these import fees by investing in carbon capture or carbon dioxide removal (CDR) technologies. This includes direct air capture or ocean-based removal methods, provided the credits purchased are certified and represent long-term CO₂ storage. Forest-based offsets are viewed as temporary and will be weighted lower. Only CDR activities in the US or partner nations will qualify, excluding projects tied to ‘foreign entities of concern’, including those linked to China.
Read more: Tokyo launches carbon marketplace to empower SMEs
With carbon management positioned as a compliance tool, the bill offers a strong incentive for global companies to scale up carbon capture and removal investments.
The Foreign Pollution Fee Act also enters a broader policy debate around carbon regulation in the US, especially as the future of the 45Q tax credit remains uncertain. Once seen as a key incentive for carbon capture, the credit now faces repeal efforts, with some lawmakers citing its cost—up to $835 billion over 18 years, according to the Institute for Energy Economics and Financial Analysis.
Internationally, carbon capture and removal continue to advance, with major investments underway in the EU and UK. Meanwhile, carbon removal is gaining legitimacy globally, now recognised by both the UN’s carbon market plans and the Science Based Targets initiative (SBTi) as an eligible strategy for emission reductions.
The proposed US legislation mirrors Europe’s Carbon Border Adjustment Mechanism (CBAM), which will begin charging importers for embedded carbon starting in 2026. While CBAM remains in transition, it already signals a broader trend: Carbon intensity is becoming a determining factor in the cost of trade. Though the bill’s political future remains uncertain, its potential to reshape global supply chains and accelerate carbon management practices is clear.
Read more: Carbon pricing: global solutions for a global challenge
As carbon becomes a currency in global trade, with policies like the Foreign Pollution Fee Act and Europe’s CBAM gaining ground, carbon management is no longer optional—it’s strategic. At DGB Group, we’re at the forefront of this shift, offering high-quality, nature-based carbon credits that meet the growing demand for credible carbon removal solutions. With independently verified impact and a focus on long-term value, our projects empower businesses and investors to lead in the new carbon economy. Explore how you can turn today’s regulatory momentum into tomorrow’s opportunity.
