Environmental Tariff

DEFINITION of 'Environmental Tariff'

A tax placed on products being imported to or exported from countries with unsatisfactory environmental pollution controls. An environmental tariff is, in effect, a sin tax, designed to make trade with environmentally negligent countries less desirable.

Also known as a "green tariff" or "eco-tariff."

BREAKING DOWN 'Environmental Tariff'

The United States began implementing environmental tariffs in 1991. Although such tariffs are generally put in place to discourage trade with countries that have dubious environmental standards, various studies have shown that taxes and regulations have had little impact on international trade. Nonetheless, more and more negative pressure is being brought to bear on companies that trade with polluters and human rights violators.