Foreign Pollution Fee Act Sends Mixed Signals to U.S. Manufacturers

WASHINGTON, DC — Yesterday, U.S. Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC) introduced the Foreign Pollution Fee Act of 2025, following the initial introduction in 2023. The bill would put a fee on imports in the following sectors — iron, steel, aluminum, cement, glass, fertilizer, hydrogen, solar components, and certain battery inputs — based on their greenhouse gas intensity relative to the U.S. average. 

The bill places no fee, tax, or burden on U.S. producers, nor does it explicitly promote further domestic investment and innovation in clean manufacturing. By doing so, the bill allows polluting U.S. facilities to freeride on the hard work of U.S. facilities innovating to mitigate climate change. 

The bill also does not reward existing overseas facilities that have better climate performance than the U.S. or their home countries. The bill will likely contribute to carbon dumping, the process through which carbon-intensive materials covered under the bill would be traded indirectly through products like vehicles, wind turbines, electrical transformers, and more in order to evade the pollution fee.

In response, Harry Manin, Deputy Legislative Director for Industrial Policy and Trade at the Sierra Club, released the following statement:

“The Foreign Pollution Fee Act could benefit American manufacturers and ensure that bigger polluters elsewhere in the world do not undercut U.S. producers. But it also sends mixed signals on how domestic and international actors must act going forward. It is concerning that polluting facilities at home are extended the same privileges as clean facilities, while clean facilities overseas are punished based on their country’s high-pollution profile.    

This bill’s goals are further under threat by the Trump administration’s chaotic actions on trade and tariffs. DOGE plans to gut the Department of Energy’s Industrial Demonstrations Program, which would ensure that American manufacturers adopt innovative and clean manufacturing technologies with an American workforce. Meanwhile, the objective of Trump’s self-inflicted trade war is indecipherable. 

We need the Trump administration to signal to manufacturers in the U.S. and other countries that they must act as if their competitiveness is tied to environmental performance. Polluting U.S. manufacturers should not be rewarded for failure to invest in innovation, and should not benefit from investments made by cleaner U.S. manufacturers. In addition, foreign manufacturers should pay a penalty when they fail to comply with U.S. environmental protections that promote clean air and water. The absence of these features in this bill unfortunately indicates the sponsors’ comfort with the EPA’s deregulatory agenda for corporations polluting U.S. communities.”

BACKGROUND

A 2023 report by the Sierra Club examines recent trade policies introduced in the U.S. and the EU that will impact the import and manufacturing of carbon-intensive goods. It assesses the ways that the U.S. can leverage trade policies to fight climate change, manufacture more goods domestically, ensure protections to vulnerable communities, and limit the influence of bad foreign actors. 

The paper compares four trade policies that utilize climate-friendly trade tools called Carbon Border Adjustments, which are either currently proposed in the U.S. or already in effect in the EU: The EU CBAM, the Clean Competition Act, the FAIR Transition and Competition Act, and the 2023 Foreign Pollution Fee Act.