The world’s shipping regulator is set to approve a global fee on the emissions produced by the shipping industry. This decision has led to threats of tariffs from the Trump administration in response.
The International Maritime Organization (IMO) will announce new rules this week aimed at holding the shipping sector accountable for its annual emissions of over 1 billion tons of greenhouse gases. While a draft plan received significant support back in April, the US has labeled it a "global carbon tax" affecting Americans, and has suggested it might consider actions like tariffs and additional fees at ports.
The IMO's proposal has taken years to develop, and its adoption would be a significant step for international climate regulations, especially with the upcoming COP30 climate summit in Brazil next month. If implemented, this would lead to a decline in the use of oil as the main fuel in shipping, favoring cleaner alternatives like ammonia. Initially, it could generate over $10 billion per year, which might increase costs throughout supply chains.
Even though there is some opposition from Washington, industry experts believe the plan will pass. If there is no agreement, it only requires a two-thirds majority vote to move forward.
A representative from the International Chamber of Shipping, which represents over 80% of the global merchant fleet, believes the levy will be approved. This sentiment is echoed by Edmund Hughes, a former IMO official focused on environmental regulation. A study by Boston Consulting Group on April’s vote suggests that countries favoring the plan also anticipate its eventual adoption.
According to BCG partner Peter Jameson, “This is a defining moment for the industry and a major advance in global decarbonization efforts. While some may try to delay the process through political pressure, it won’t change the overall outcome.”
The US has strongly opposed the plans initiated by what it calls “an unaccountable UN organization,” and is sending a delegation to the meeting in London this week. Last week, the US again urged other nations to reject the proposed regulations, claiming that they could lead to “disastrous” economic consequences, with forecasts suggesting shipping costs could rise by 10% or more.
On Friday, the State Department mentioned it is looking into options, including tariffs. It also announced that visa restrictions, sanctions on officials, and commercial penalties are among the potential responses against countries supporting the regulations, but no mention of tariffs was made.
When Bloomberg followed up on this matter, the State Department neither confirmed nor denied that tariffs could be part of the possible actions considered.
The proposed regulations would increase costs for everyone involved, raising concerns that they might turn into a “global environmental slush fund,” adversely affecting the shipping industry and its customers. This was voiced by a US representative during a speech at the ongoing meeting.
Several nations, including the UK and Netherlands, have shown their support for the proposed framework during this gathering.
These additional levies would be another concern for global trade, considering President Trump’s existing reciprocal tariffs on imports from major trade partners, which range from 10% to 50%. He has also targeted sectors crucial to national security, like automobiles, steel, and aluminum, with plans to apply similar duties to others, including semiconductors, pharmaceuticals, and industrial machinery.