UK carbon border tariff is good but late

The UK government announced a carbon border levy yesterday that will take effect from 2027. There wasn’t much fanfare but it’s worth paying attention, for at least three reasons. First, a levy is much better than no levy. Without taxing high-carbon imports like steel and cement, the UK would simply be exporting its emissions. Second, it’s late; a year after the EU plans to introduce one, so for that year China – for example – will be able to dump cheap exports on the UK market, hurting British producers. Third, it’s an instructive example of Brexit in action. Brexit gives the UK the freedom to diverge from the rest of Europe. In this case the UK does so, ostensibly to give businesses time to adapt. But they don’t want it. Make UK and Steel UK both tell the FT their members would be better off moving faster to be ready for a levy in 2026 along with the EU. So freedom to diverge in principle only reveals the stronger argument for convergence in practice. Who’da thunk?