U.S. Republican senators Bill Cassidy and Lindsey Graham have introduced an updated version of a bill that proposes a carbon tax on imports from countries with more polluting production methods, including China. The announcement was made on Bill Cassidy’s official page.

The bill, titled the Foreign Pollution Fee Act, aims to create a level playing field for U.S. manufacturers and countries that engage in unfair trade practices.

Bill Cassidy emphasized that other countries can reduce production costs by up to 20% by not implementing laws that are standard in the United States, which, according to him, results in the loss of American jobs.

Lindsey Graham added, “It is long past time that the polluters of the world, like China and others, pay a price for their policies. This bill calls out foreign polluters and rewards American businesses that are doing the right thing. We are leveling the playing field, and American manufacturers will be the biggest beneficiaries.”

The proposed legislation focuses on addressing China’s manipulation of trade rules, boosting the resilience of global supply chains through diversified trade relationships, and revitalizing U.S. manufacturing. Additionally, the bill seeks to reduce imports of environmentally harmful goods, expand U.S. export markets, and strengthen trade ties with allies that share the U.S.’s economic and environmental values.

The Foreign Pollution Fee Act is also designed to encourage international partners to adopt cleaner production methods, while ensuring that U.S. manufacturers maintain a competitive edge and continue their leadership in decarbonization efforts.

In 2023, the senators first introduced the Foreign Pollution Fee Act, and in December of that year, they released a revised version for further discussion. According to Shuting Pomerleau, Director of Energy and Environmental Policy at the American Action Forum, the updated bill proposes a 15% carbon tariff on imports from six sectors—aluminum, cement, iron and steel, fertilizers, glass, and hydrogen—with an additional 40% tax based on the carbon intensity of these goods.

The original version of the law was updated in 2025 to reflect feedback from public consultations. The initial provision, which imposed a 15% base rate on all imported goods regardless of their carbon intensity, was removed. Instead, the tax will now apply only to imports that have a higher carbon intensity than their U.S. counterparts.

In the fall of 2023, U.S. steelmakers expressed support for the cross-border carbon tax proposal. The Foreign Pollution Fee Act of 2023 was generally endorsed by the American Iron and Steel Institute (AISI) and the Steel Manufacturers Association (SMA).