https://macropaperwarehouse.com/authors/farid-farrokhi/Farid FarrokhiHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/can-trade-policy-mitigate-climate-change/https://macropaperwarehouse.com/papers/can-trade-policy-mitigate-climate-change/<p>Farrokhi and Lashkaripour (2025) study the interaction between trade policy and climate change. The central research question is whether and how countries can use trade policy — specifically import tariffs — to address carbon leakage arising from domestic carbon pricing. When a country prices carbon domestically, production and emissions can shift to countries without carbon pricing, partially offsetting domestic emissions reductions. The paper asks how optimal import tariffs should be designed to internalize this leakage, how they relate to standard terms-of-trade tariffs, and what additional gains multilateral coordination can deliver.</p>